Core Truth Three: Unintended Consequences

Intentions are not results.

Good intentions do not matter.  

What matters are all of the consequences.

When you combine the truth that Incentives Matter with individuals pursuing their own subjective perceived interest you get our third Core Truth: Unintended Consequences.  Unintended consequences mean that individuals react to laws (or other changes) in ways that were not anticipated by the those imposing the change.  Sometimes the reactions are good, and sometimes the reactions are bad.

Core Truth Two: Incentives Matter

Economists' fundamental principle is "Incentives Matter."  This maxim means that people change their behavior to either obtain perceived benefits or avoid/reduce perceived costs.  If the perceived benefit outweighs the perceived cost - the individual is more likely to assume the cost. If the opposite is the case - the individual will seek ways to avoid or reduce the cost.