Analysis / Incest Is Relative

Genetics

For reference, every relationship is technically incest since everyone is at least your 16th cousin. However, we use the term incest for people who are at least 3rd cousins. In reality, marrying a 3rd cousin is taboo because of social reasons and not genetic as 3rd cousins are not known to produce mutant offspring.

Take a look at how many genes various relations share:
  • Identical twins — 100%
  • Full siblingsnote  — 50%
  • Parent/Child — 50%
  • Half siblings — 25%
  • Grandparent/Grandchild — 25%
  • Aunt/Uncle/Niece/Nephew — 25%
  • 1st cousinsnote  — 12.5%
  • Half cousinsnote  — 6.25%
  • 2nd cousinsnote  — 3.13%
  • 3rd cousinsnote  — 0.78%
  • 4th cousinsnote  — 0.20%

3rd—and even 2nd—cousins are barely related. The risk of a couple having babies with genetic disorders is present, but minor—comparable to a woman having a baby in her 40s.

Unrelated couples are not immune to having children with genetic disorders. Think of a couple who both have sickle cell; it might be unwise for them to have biological children, as they'd have a high risk of a genetic disorder—but because their genetic risk isn't due to inbreeding, it's not "gross".

Westermarck Effect

The Westermarck effect means that that growing up in proximity at a young age (through approximately six years of age) usually prevents kids from thinking about each other sexually. It has to due with upbringing—not genetics—so Not Blood Siblings who were raised together really shouldn't be thinking like that, Surprise Incest is all too plausible, and Unlucky Childhood Friends often fall victim of Westermarck effect too.

Two people who grow up together are unlikely to engage in sexual activity with each other because their instincts tell them it's wrong. That's why most people who are an incestuous relationship seem odd: Somehow their natural instinct was broken, which is usually done through some traumatic experience(s).
http://tvtropes.org/pmwiki/pmwiki.php/Analysis/IncestisRelative