Economic incentives are sandwiched between two other factors. One is more attractive, and tends to dominate discussion, and the other is more powerful and tends to dominate actual behavior.
The more attractive force is morality. People consciously approach their own behavior in moral terms, and they struggle, occasionally successfully, to defy economic incentives that conflict with their moral values. This personal focus on morality (even if it is a narcissistic delusion) makes it much more natural to discuss policy in moral terms than it terms of incentives. I don't think this is helpful for policy discussions. We should all follow what we think is right, but policy needn't reflect moral consensus.
The more powerful force is culture. Think of all the people in jail for selling drugs who could be living middle class lives if only they had rejected their social identities and social ties to follow economic incentives. It's hard to imagine more powerful economic incentives than the ones operating in American life today. If you're a poor kid and you dedicate your life to achieving technical competence in a highly paid profession, the economic elite is ideologically invested in the idea that you should be rewarded with a comfortable, secure upper-class life. Not only are they eager to see you assume the most economically productive position in life you can, in order to bolster the U.S. economic growth that their investments largely track, but even more importantly, denying you the social position you've earned would undermine the legitimacy of their social position. And if you shoot for Harvard law or Harvard medicine but fall short, you'll still fall in the upper middle class somewhere. The incentives couldn't be more clear, but mistrust and cultural ties muddy things up. The fact that people make many of the most crucial decisions of their lives as ignorant children, or have those decisions made for them by ignorant parents, gives culture a big advantage over incentives. People don't see incentives with perfect, X-ray vision. They see them through whatever lens they've been equipped with by their upbringing.
The effectiveness of incentives, then, depends on cultural factors. In the case of corporations and thoroughly bourgeois businesspeople, we underestimate the power of incentives. In the case of everybody else, we overestimate the power of incentives. In the case of persuading inner-city youth to dedicate themselves to lucrative (for us as well as them) middle-class lives instead of lives of crime, our failure is less in providing opportunity (aka incentives) than in teaching them to see the opportunity and believe in it so that it becomes possible for them to work towards it.
I do believe laws should be seen more as a system of incentives than as enforcers of a privileged morality, but laws should be designed to be effective incentives for the people who live under them, not for homo economicus.