I'm sorry if I'm repeating what someone has already said because I read the first 100 post and then the last 31 or so before I got tired of reading.
By the way, this is just my way of procrastinating because I'm supposed to be studying...
This is some information I learned in my Marriage and Kinship class. (wow, apparenlty you do learn stuff in distribution requirement classes).
Incest hasn't always been reprehensible. There are certain cultures in which incest was encouraged. Which ones? I forgot. So I didn't learn very much.
However, interestly enough there might actually be a developmental component to why incest is repulsive to us. So in Isreal there were a group of Jews, that decided to raise children as communities. So basically what they did was at a very early age, groups of children were raised together in the sense, that they spent all there time together, eat together, learned together, etc... Later on there were expected to marry within the group. However, they have found was that the average birth rate was lower than normal. Remember this is a time when they didn't really have birth control yet, we can use this as a rough measurement of sexual attraction. The data seems to imply that being in constant proximity at a younge age has an negative effect on sexual attraction. However, the problem with this is that you have no control group to compare against.
Therefore, we can look at another population. Back a long time ago, in Taiwan, marriages were still arranged. However there are two forms of arranged marriage. One in which, the bride was obtained when she was fully mature, and the other when the bride was obtained close to birth, and the husband and wife were raised essentially as brother and sister throughout their developmental years. In comparing the birth rates of arranged marriages of mature girls and arranged marriage of cohabited children, you also see a decreased birth rate among those of cohabited children.
However, you may say that perhaps it's just familiarity that is decreasing the sexual attractiveness of the partner. When you graph the birth rate as a function of the age in which the girl was brought into the household, you find that there is a gradual decrease when you go from maturity to about 5 years of age. And when you go from 5 years old to almost close to birth, you find that the birth rate decreases dramatically. This seems to imply that there is some degree of imprinting that occurs during our first few years of life, that seems to tell us that the people around us are off limits. However, the mechanism for this has not yet been established.
As an interesting side note, in the late 19th century and late 20th century, it was actually debated by biologists on where inbreeding was a good thing or a bad thing. It was clear that inbreeding as deletarious effects on individuals, however, it was not clear that it was necessarily bad for the population. One argument was that inbreeding allowed for natural selection to bring out deletarious mutations earlier and prevent their spread in the general population. Therefore, inbreeding actually increases the fitness of the population. However, the problem with that argument was that they didn't know that mutation were capable of arrising spontaneously. So there are always going to be an endless supply of deletarious mutations. Another argument was that inbreeding minimal if any effect on population dynamics. At least in animal studies it has been shown that after 59 generations of intense inbreeding you see survival rates close to those that are randomly mated.
Ok, my girlfriend is getting mad that I'm not studying (she just came back from dinner). So need to wrap up quickly basically incest might actual provide some short term benifits in population fitness in the short term. However, it will decrease the fitness of the population in the long term because by homogenizing the population, you make it less capable of adapting to change. Therefore, evolution favors species that do not inbreed.