Why Motives Matter: Reframing the Crowding Out Effect of Legal Incentives

Legal rules and regulations are routinely rationalized by appeal to the incentives they create. This Note examines an important but misunderstood fact about incentives-namely, that they often "crowd out" the natural motivations that citizens have to engage in socially valued behavior, such as a sense of civic duty, a commitment to personal growth, and charity towards others. The "crowding out effect" of incentives has traditionally been viewed as problematic because of cases where it renders incentives counter-productive when fear of legal sanction or desire for financial reward substitutes for other forms of motivation in agents, this often leads to less of the socially valued behavior regulators sought to incentivize. In contrast, I explore whether the effect of legal incentives on our motivational psychology might be inherently regrettable in some cases, quite apart from the effect on behavioral outcomes. I show that a normative refraining of the crowding out effect that takes seriously the inherent value that resides in our "higher motives" generates novel insights into a variety of legal phenomena, including doctrinal rules in intellectual property, contracts, and torts; and a neglected theory for legal reformation, one that bears on the choice between rule- and standard-based legal directives and on the strategic use of the law to improve the way citizens conceptualize their obligations to each other.