Legislation and Countervailing Effects from Social Norms

Human behavior is influenced both by internal norms or values (what people think is just behavior) and exogenous restrictions including legal sanctions. In the paper we study the interaction between these legal and extralegal forces and highlight the possibility of a countervailing effect of norms and individual behavior in the face of changes in the legal environment. Building on the stylized fact that people's individual values are partly static and partly subject to change over time, we consider these social and legal forces as two main factors that contribute to the change in individual values. Legal innovation that departs from current values may lead to private enforcement norms or civil disobedience. Through private enforcement of expressive laws and through civil disobedience, individuals reveal their approbation or disapproval of laws to other individuals. This may lead to a hysteresis effect on individual values that may have a reinforcing or countervailing effect on the legal innovation. Our model of countervailing norms complements the existing literature on expressive law, by showing conditions under which the equilibrium behavior may move in the opposite direction from that intended by the law. Our model studies the dynamics of such problem and unveils several important predictions and practical implications for the design of law