Check out this post I wrote on Cardinal Path’s blog! This is one of my favourite blog posts. Goodhart’s Law seems to pop up everywhere! That’s why you need to think about how you measure your goals and targets and make sure they don’t skew incentives in an undesirable direction.
From the post:
“When a measure becomes a target, it ceases to be a good measure.” – Goodhart’s Law
Goodhart’s Law reminds us that oftentimes, setting a target (such as a KPI), can change the way in which people work toward the goals these targets are meant to help us reach.
An absurd example of this occurred in India during the time of the British rule. There was an abundance of venomous cobra snakes loose on the streets, so the British government offered money for each dead cobra that was turned in. Rather than resulting in everyone catching many cobras and handing them in to collect their bounty, thus reducing the cobra population, people actually began to breed cobras and hand them over to the government for the bounty. This was obviously not a solution to the problem. To add to the problem, once the government caught wind of these breeders, they stopped paying the bounty, so the breeders released all of the cobras– resulting in an even higher population of cobras.
Read the whole thing.