Two influential ideas from the social sciences. A theory and a fallacy. With the same name.
The broken windows theory was first introduced by James Q. Wilson and George Kelling in 1982. The idea is that small signs of disorder in a community — like broken windows — can increase the sense of lawlessness and lead to more serious crimes. Police leaders in the 1990’s and 2000’s used this theory to justify a crackdown on lots of small offenses (drunkenness, fair evasion, vandalism), believing that it would lead to a reduction in violent crime. (Violent crime has indeed decreased dramatically since the rise of these policing techniques, though no one is quite sure if the relationship is causal or not.)
The broken windows fallacy is 130 years older. Frédéric Bastiat introduced this thought experiment in 1850 in order to show that GDP is not a full measure of an economy’s health. In fact, certain things that might increase GDP — like the repair of a broken window by a glazier — might reflect an underlying loss of economic wealth. This is why we don’t root for natural disasters…. They might lead to an increase in GDP as we aim to replace destroyed capital. But that increase in GDP doesn’t reflect wealth creation.
Back in 2012, Matthew Yglesias fell into a 21st-century version of the broken windows fallacy, when he wrote this article for Slate:
Yes, perhaps divorce does lead to an upward blip in GDP. But it’s almost certainly also destroying economic wealth, and there’s no doubt that it reflects a reduction in the well-being (the utility, if you will) of the folks involved.
Some enterprising young professor needs to craft a whole course on behavior and economics, using broken windows as a case study.