Goodhart's Law

Goodhart's law states that once a measure is turned into a target, it ceases to be a good measure. To introduce this idea, Kyle and Linh Da describe two classic examples.

The first example describes a true a story from Hanoi, Vietnam when the country was under French rule. At the time, there was a problem of excessive rats. To solve this problem, the colonial regime created a bounty program that provided a cash reward for each rat killed. And as proof of the killing, citizens had to bring the tails of the rats killed. Although many people came to claim the cash reward, the number of rats in the city did not decrease. Colonial officials discovered that people weren't killing the rats, but releasing back to the open so that they could procreate and produce more rates, thereby increasing the catcher's revenue. As a consequence, the number of rats increased and the problem turned even worse.

Another classic example comes from the British India, when authorities provided rewards for dead cobras as a way to decrease the population of cobras. However, this led some people to breed cobras to get more money. When authorities found this out, they revoked the rewards. So then the cobra breeders released the cobras into the country, which resulted in an increase in the cobra population density.

A decision that produces an effect opposite to the initial purpose came to be known as the Cobra Effect. A closely related idea is Campbell's Law, which states the following:

"The more any quantitative social indicator is used for social decision-making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor."

For example, when companies start to focus on a particular key performance indicator (KPI), the quality of that metric deteriorates. People can change the way they behave, so once they understand how they are being measured, the measure becomes useless as people seek to do well on the measure.

In this episode, Kyle and Linh Da give a few more examples to show how Goodhart's Law affects search engine optimization, call centers, and Scrum.

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