Goodhart's Law
Goodhart's Law: The Perils of Targeting Measures
Goodhart's Law is a principle that underscores the unintended consequences of setting targets based on specific metrics. Coined by British economist Charles Goodhart, the law states: "When a measure becomes a target, it ceases to be a good measure." Essentially, once a metric is treated as a goal, it loses its value as an accurate indicator of success or performance. This article explores three case studies that exemplify the pitfalls of Goodhart's Law, spanning from colonial India to the battlefields of Vietnam, and a contemporary crisis in Thailand.
Case Study 1: The Cobra Effect
One of the most infamous examples of Goodhart's Law in action is the Cobra Effect, which occurred during British colonial rule in India. Faced with a growing population of venomous cobras in Delhi, the colonial government decided to offer a bounty for every dead cobra, believing this would incentivize the local population to reduce the snake population.
Initially, the plan seemed to work, with many cobras being killed and turned in for the bounty. However, the unintended consequence soon became apparent: entrepreneurial locals began breeding cobras in order to kill them and collect the reward. When the government caught wind of this scheme, they promptly ended the bounty program. Left without financial incentive, the breeders released their now-worthless cobras, leading to an even larger population of snakes than before. The measure intended to control the cobra population had backfired spectacularly, turning the problem into an even bigger one.
Case Study 2: The Viet Cong Bounty
During the Vietnam War, the United States military offered bounties for killing Viet Cong soldiers. The logic was simple: by monetizing the elimination of enemy combatants, the U.S. could weaken the Viet Congâs forces. However, this measure too had unintended consequences.
Rather than effectively reducing the number of Viet Cong fighters, the bounty system led to several issues. First, it incentivized the killing of civilians, as some unscrupulous individuals found it easier to present non-combatants as enemy soldiers in order to claim the bounty. Second, it played right into the hands of the Viet Cong, who used the bounty system to manipulate U.S. forces. By planting decoys and misinformation, the Viet Cong lured American troops into ambushes and traps, causing significant casualties. The measure that was supposed to turn the tide in favor of the U.S. instead led to strategic blunders and a worsening of the conflict.
Current Event: The Blackchin Tilapia Outbreak in Thailand
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In a more contemporary example, Thailand is grappling with an outbreak of Blackchin tilapia, an invasive species native to Africa that has wreaked havoc on the local seafood industry. In response to the crisis, the Thai government and CPF Company, a major agribusiness conglomerate, implemented a policy to buy tilapia caught by local fishermen, hoping to curb the spread of the species and protect the industry.
On paper, the policy appeared sound. By creating a financial incentive for catching the invasive fish, the government hoped to reduce their numbers. However, CPF Company, facing its own outbreak incident, began to see record profits from this arrangement, raising questions about the true motives behind their support. With such high earnings from the buy-back program, there is growing concern that CPF might be less motivated to address the root cause of the outbreak, as the lucrative buy-back scheme becomes a "target" rather than a "measure" of success.
This situation exemplifies the danger of Goodhart's Law in a modern context: when profit becomes the primary measure of success, the original goalâcontrolling the invasive speciesâcan be sidelined, potentially leading to policies that prioritize short-term gains over long-term solutions.
The Broader Implications
These three case studies highlight the fundamental issue at the heart of Goodhart's Law: when a measure becomes a target, the system is gamed, and the measure loses its original intent and effectiveness. Whether it's cobras in colonial India, bounties in Vietnam, or tilapia in Thailand, the lesson is clear: policymakers must be vigilant in ensuring that the metrics they use to gauge success are not turned into goals themselves. Otherwise, they risk creating new problems or exacerbating existing ones, all while believing they are on the path to solving them.
Conclusion
Goodhart's Law serves as a cautionary tale for policymakers, organizations, and individuals alike. In our quest to quantify and measure success, we must remain aware of the law's implications and avoid the trap of turning valuable measures into targets. The stories of the Cobra Effect, the Viet Cong bounty, and the Blackchin tilapia outbreak remind us that while numbers and metrics are crucial tools, they should never become the sole focus, lest we lose sight of the real objectives we set out to achieve.
