"Three European Union nations -- France, Spain and Portugal -- do not prosecute consenting adults for incest, and Romania is considering following suit.
"Incest is defined as sexual intercourse between people too closely related to marry legally. In the United States, all 50 states and the District of Columbia prohibit even consensual incest, although a few states impose no criminal penalties for it..."
Incest is surely one of the prototypical repugnant transactions, namely one that people don't like to have others engage in. Such repugnance is often reflected in law, but by no means always. (E.g. there is no law against going to the front of a long line at the supermarket checkout counter and asking a person near the front to sell you their spot, i.e. to move to the back of the line and let you into their place in return for a cash payment. But here's a story of an economist , Oz Brownlee, who, after trying to do that, decided that the best course of action was to leave the store without buying anything.)
A famous article by Jonathan Haidt (Haidt, J. (2001). The emotional dog and its rational tail: A social intuitionist approach to moral judgment. Psychological Review. 108, 814-834 ) begins with an example of consensual incest.
"Julie and Mark are brother and sister. They are traveling together in France on summer vacation from college. One night they are staying alone in a cabin near the beach. They decide that it would be interesting and fun if they tried making love. At very least it would be a new experience for each of them. Julie was already taking birth control pills, but Mark uses a condom too, just to be safe. They both enjoy making love, but they decide not to do it again. They keep that night as a special secret, which makes
them feel even closer to each other.
What do you think about that, was it OK for them to make love?
"Most people who hear the above story immediately say that it was wrong for the siblings to make love, and they then set about searching for reasons (Haidt, Bjorklund, & Murphy, 2000). They point out the dangers of inbreeding, only to remember that Julie and Mark used two forms of birth control. They argue that Julie and Mark will be hurt, perhaps emotionally, even though the story makes it clear that no harm befell them. Eventually,
many people say something like “I don’t know, I can’t explain it, I just know it’s wrong.” But what model of moral judgment allows a person to know that something was wrong, without knowing why?"
Haidt (and colleagues, particularly Paul Rozin) have studied the emotion of disgust, and think that a lot of moral judgements may be mediated by the disgust reaction (whose initial evolutionary significance is presumably to prevent us from eating spoiled food, etc.). This makes a lot of sense for incest (because evolution should help us avoid inbreeding, with the excessive concentration of recessive genes in offspring).
I suspect that many of the more clearly economic transactions that are or have been regarded as repugnant are less closely tied to hard-wired disgust. That is not to say that, as people who are culturally acclimated to find some kind of transaction repugnant (e.g. charging interest on loans was repugnant for centuries in Europe), we may not be able to recruit our disgust reaction to make sense of things we disapprove of. Just as not every repugnant transaction is against the law, they may not all originate with (or even activate in a secondary manner) feelings of disgust. (See my other posts on repugnant transactions for a variety of examples...)
Update: see an article on disgust and moral judgement in the March 2009 issue of The Jury Expert (a very task oriented journal focused on picking and persuading jurors): Grime and Punishment: How Disgust Influences Moral, Social and Legal judgments