The Daily Cow

Many politically-sensitive topics become trivial when considering only their immediate outcomes--the poor deserve a decent life too, so give them the basic necessities like food, shelter and some spending money. But when considered as a subset of the entire picture, that line of reasoning is disastrous. The poor will have no incentive to work (if they can't earn reasonably more than what they're given for free to cover for their time and effort) and to limit their family size. With a smaller tax-base and a much larger tax-burden, the rest of society will crumble underneath the growing weight of taxation, pushing the society further into poverty.

The tension isn't just economic. It can also be social. Take abortion for instance. There are arguments to be made for both sides, but the most convincing of them are that (a) women have the right to control their own bodies (an appeal to liberty) and that (b) making it easier to get an abortion disincentivizes people from being more careful through preventive methods (an appeal to distortion of incentives). The former argument (a) preaches the outcome side while the latter argument (b) criticizes the incentive side. Neither side is willing to break the tension by crossing the border between incentives and outcomes. Therefore, neither argument is complete.

As an economist, I believe that there is a net benefit (benefit - cost) to everything, which we call "utility", an abstract value that captures the trade-offs people are willing to make. Simply capture the entire net social cost of an abortion in a price, make alternative forms of contraception more affordable (such that the cost directly varies with urgency), and the entire argument (b) becomes null while retaining women's rights to their own bodies. Perhaps make preventive methods (condoms and birth control pills) free, morning-after methods inexpensive, and abortions expensive (Sufficient data is necessary to correctly calibrate their optimal prices). This construction maintains the liberty while not distorting incentives.

The same principles apply to almost instance of tension between outcomes and incentives. Simply capture the net cost of the issue in a flat "tax", and things will naturally tend toward a more efficient equilibrium.