Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. It is assumed in this paper that habits and social norms constrain the influence of economic disincentives on individual behavior, but that these constraints themselves may subsequently be influenced by the very same disincentives. It is also assumed that an individual is more likely to obey such habits and norms if many individuals in society do so. Though such constraints on economic behavior usually recede only gradually in response to changes in economic incentives, it is argued that major macroeconomic shocks may drastically speed up the process (a "ketchup effect"). These features may generate multiple equilibria and vicious dynamics.
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I. The basic ideaThe basic idea of this paper is that various disincentive effects of welfare-state arrangements on economic behavior, and related economic distortions, are often delayed because habits and social norms constrain economic behavior. It will also be argued that these constraints themselves may be subsequently influenced by the very same disincentives. This is assumed to be the case not only for private agents but also for public-sector administrators. As a result, generous welfare-state arrangements may generat~ multiple equlilbria and vicious, or "hazardous" dynamics.One reason for confining the discussion to disincentive effects, and hence to various costs of welfare state arrangements, rather than covering both benefits and• I am grateful for useful comments on an earlier draft by Kenneth Arrow, Anders Björklund, Peter Hedström, Dennis J. Snower, Martin PaIdam, Robert Zeckhauser and two anonymous referees, without implying any shared responsibility for the somewhat unconventionaI anaIysis.