Explanation: There’s a common story that during British rule of India, some local Brit officials got the bright idea to reduce the (legitimately deadly) cobra population. Of course, they wouldn’t do it themselves - that would be dangerous! Rather, they decided to pay a bounty to people for each dead cobra turned in! Why didn’t Indians just think of this before?
… after some time of paying out bounties but cobra attacks not dropping, it came to the Brits’ attention that people were just farming cobras and turning them in. Thus, the bounty was rescinded… and the farmed cobras, no longer useful, released… causing cobra attacks to go up.
This is often cited as a classic example of ‘perverse incentives’ in economics - when the trigger for an economic incentive can be easily taken advantage of in a counterproductive way.
What is the most effective way to counter bad-faith exploitation of a system that is intended to fix a problem?
It’s a very delicate balance. If your prevention is too robust, you can end up with a system that causes more damage than the problem it ‘solves’. If your prevention isn’t robust enough… cobras. Everywhere.
Luckily, as it is a recognized concept that is widely taught nowadays, we can rest easy knowing that any new systems implemented will not be ignorant of the concept of perverse incentives, just consciously disregarding all the boring eggheads who ring the alarm on the system’s first drafts.
Yeah, the actual solution is to create some entity responsible for reducing the threat, rather than attempting to avoid the administrative work by creating a lazy-ass bounty program.
Same issue with capitalism. Attempting to reduce the administration of dealing with a societal issue by foisting the work off onto people by promising them profits just makes everything worse.
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Explanation: There’s a common story that during British rule of India, some local Brit officials got the bright idea to reduce the (legitimately deadly) cobra population. Of course, they wouldn’t do it themselves - that would be dangerous! Rather, they decided to pay a bounty to people for each dead cobra turned in! Why didn’t Indians just think of this before?
… after some time of paying out bounties but cobra attacks not dropping, it came to the Brits’ attention that people were just farming cobras and turning them in. Thus, the bounty was rescinded… and the farmed cobras, no longer useful, released… causing cobra attacks to go up.
This is often cited as a classic example of ‘perverse incentives’ in economics - when the trigger for an economic incentive can be easily taken advantage of in a counterproductive way.
Perverse incentives is a concept I’m going to think about a lot today.
What is the most effective way to counter bad-faith exploitation of a system that is intended to fix a problem?
I feel like this kind of issue is very prevalent today, opportunistic grifting that hurts communities when the original intent is discarded for greed?
It’s a very delicate balance. If your prevention is too robust, you can end up with a system that causes more damage than the problem it ‘solves’. If your prevention isn’t robust enough… cobras. Everywhere.
Luckily, as it is a recognized concept that is widely taught nowadays, we can rest easy knowing that any new systems implemented will not be ignorant of the concept of perverse incentives, just consciously disregarding all the boring eggheads who ring the alarm on the system’s first drafts.
See AXS
See Ticketmaster
See US politics
Yeah, the actual solution is to create some entity responsible for reducing the threat, rather than attempting to avoid the administrative work by creating a lazy-ass bounty program.
Same issue with capitalism. Attempting to reduce the administration of dealing with a societal issue by foisting the work off onto people by promising them profits just makes everything worse.
Bounty programs can be cost-effective sometimes, but they are a very blunt weapon effective on only the broadest and most indelicate of problems.
Why didn’t those silly Brits raise mongooses (mongeese?) to hunt down the cobras? Then the issue would have been solved once and for all!
And if not, we can just release a large number of leopards to hunt them, fixing any issues
Fool proof!
and then we can release a large number of gorillas to hunt the leopards!
That’ll solve the… wait, what’s the original problem again?
Patrician Vetinari: “Tax the rat (cobra) farms.”