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A perverse incentive is an incentive that has an unintended and undesirable result that is contrary to the intentions of its designers. The cobra effect is the most direct kind of perverse incentive, typically because the incentive unintentionally rewards people for making the issue worse.[1][2] The term is used to illustrate how incorrect stimulation in economics and politics can cause unintended consequences.

The original cobra effect

The Indian cobra

The term cobra effect was coined by economist Horst Siebert based on an anecdotal occurrence in India during British rule.[2][3] The British government, concerned about the number of venomous cobras in Delhi, offered a bounty for every dead cobra. Initially, this was a successful strategy; large numbers of snakes were killed for the reward. Eventually, however, people began to breed cobras for the income. When the government became aware of this, the reward program was scrapped. When cobra breeders set their snakes free, the wild cobra population further increased.[4] This story is often cited as an example of Goodhart's law or Campbell's law.[5]

Examples of perverse incentives

Pest control campaigns

Community safety and harm reduction

Environmental and wildlife protection

Historic preservation schemes

As an incentive to preserve historical buildings, governments may designate older structures as historical properties; such classification may prevent or impede further sale or alteration of the property. Any compensation offered may be significantly less than normal commercial returns on properties or land.[citation needed] Examples related to this type of perverse incentive include:

Healthcare cost control

Humanitarian and welfare policies

Promotional schemes and public relations

Returns for effort

In literature

In his autobiography, Mark Twain says that his wife, Olivia Langdon Clemens, had a similar experience:[41]

Once in Hartford the flies were so numerous for a time, and so troublesome, that Mrs. Clemens conceived the idea of paying George a bounty on all the flies he might kill. The children saw an opportunity here for the acquisition of sudden wealth. ... Any Government could have told her that the best way to increase wolves in America, rabbits in Australia, and snakes in India, is to pay a bounty on their scalps. Then every patriot goes to raising them.

See also


  1. ^ Brickman, Leslie H. (2002). Preparing the 21st Century Church. Xulon Press. p. 326. ISBN 978-1591601678.
  2. ^ a b Siebert, Horst (2001). Der Kobra-Effekt. Wie man Irrwege der Wirtschaftspolitik vermeidet (in German). Munich: Deutsche Verlags-Anstalt. ISBN 3421055629.
  3. ^ a b Dubner, Stephen J. (11 October 2012). "The Cobra Effect: A New Freakonomics Radio Podcast". Freakonomics, LLC. Retrieved 24 February 2015.
  4. ^ Schwarz, Christian A. (1996). NCD Implementation Guide. Carol Stream Church Smart Resources. p. 126. Cited in Brickman, p. 326.
  5. ^ Coy, Peter (26 March 2021). "Goodhart's Law Rules the Modern World. Here Are Nine Examples". Retrieved 12 January 2023.
  6. ^ Vann, Michael G. (2003). "Of Rats, Rice, and Race: The Great Hanoi Rat Massacre, an Episode in French Colonial History". French Colonial History. 4: 191–203. doi:10.1353/fch.2003.0027. S2CID 143028274.
  7. ^ "Fort Benning puts a bounty on boars". NBC News. Associated Press. 1 March 2008.
  8. ^ Animal and Plant Health Inspection Service (27 May 2015). "Chapter 2: Alternatives; Section 2. Methods Dismissed" (PDF). Feral Swine Damage Management: A National Approach. U.S. Department of the Interior Fish and Wildlife Service; U.S. Department of Agriculture Natural Resource Conservation Service. United States Department of Agriculture, APHIS. p. 78. Final Environmental Impact Statement. Archived from the original (PDF) on 20 May 2023.
  9. ^ Ditchkoff, Stephen S.; Holtfreter, Robert W.; Williams, Brian L. (September 2017). "Effectiveness of a bounty program for reducing wild pig densities". Wildlife Society Bulletin. 41 (3): 548–555. Bibcode:2017WSBu...41..548D. doi:10.1002/wsb.787.
  10. ^ Whitlock, Craig (2021). The Afghanistan Papers: A Secret History of the War. Simon and Schuster. p. 136. ISBN 978-1982159023.
  11. ^ Rose, Janus (2 August 2022). "Someone Made $3,000 Selling 3D-Printed Guns at a Gun Buyback Event". Vice. Archived from the original on 2 August 2022.
  12. ^ "Participant used a 3D printer to make firearm parts in bulk that he then exchanged for gift cards". Associated Press. 11 October 2022.
  13. ^ Aleccia, Jonel (21 December 2022). "New label law has unintended effect: Sesame in more foods". Associated Press.
  14. ^ "RSA 2000, c C-12 | Child, Youth and Family Enhancement Act". CanLII. 1 April 2023. Retrieved 14 March 2024.
  15. ^ Johnston, Janice (30 October 2019). "Serenity's Law receives royal assent". Canada Broadcasting Corporation. Retrieved 14 March 2024.
  16. ^ Graveland, Bill (1 October 2017). "Alberta urged to enforce law on child abuse reporting". Canadian Broadcasting Corporation. Retrieved 14 March 2024.
  18. ^ a b Langpap, Christian, and JunJie Wu. 2017. "Thresholds, Perverse Incentives, and Preemptive Conservation of Endangered Species" Journal of the Association of Environmental and Resource Economists 4(S1):S227–S259. doi:10.1086/692070.
  19. ^ Stephen Dubner and Steven Levitt, Unintended Consequences, New York Times Magazine, 20 January 2008
  20. ^ "The Cobra Effect". Freakonomics. Archived from the original on 18 October 2012.
  21. ^ Rosenthal, Elisabeth; Lehren, Andrew W. (8 August 2012). "Incentive to Slow Climate Change Drives Output of Harmful Gases". The New York Times. ISSN 0362-4331. Retrieved 2 July 2015.
  22. ^ Gupta, Anika. "Carbon credit scam slur on Indian firms". Hindustan Times. Archived from the original on 4 July 2015. Retrieved 2 July 2015.
  23. ^ "Commission adopts ban on the use of industrial gas credits". Climate Action. European Commission. 23 November 2016. Retrieved 3 November 2019.
  24. ^ "RHI scandal: RHI 'cash for ash' scandal to cost NI taxpayers £490m". BBC News. 23 December 2016.
  25. ^ "Stormont crisis: Deadline passes for future of executive". BBC. BBC News. 16 January 2017.
  26. ^ "Bristol Jacobean ceiling 'destroyed before listings visit'". BBC News. 1 September 2017.
  27. ^ "Press release: Developer mutilates Jacobean ceiling to avoid potential listing". Save Britain's Heritage. 31 August 2017.
  28. ^ Newcomb, Amelia A. (21 May 1982). "Historic buildings prove special target for arson". Christian Science Monitor. ISSN 0882-7729. Retrieved 13 January 2023.
  29. ^ James C. Robinson, Reinvention of Health Insurance in the Consumer Era (2004). In JAMA, April 21, 2004; 291: 1880–1886. Retrieved 2008-01-12
  30. ^ Sanger-katz, Margot (10 March 2016). "Medicare Tries an Experiment to Fight Perverse Incentives". The New York Times. ISSN 0362-4331. Retrieved 30 July 2016.
  31. ^ Keller, Tony (12 July 2018). "Canada Has Its Own Ways of Keeping Out Unwanted Immigrants". The Atlantic. Retrieved 30 June 2021.
  32. ^ "Gassing up the welfare trap machine -". Atlantic Institute for Market Studies. 6 January 1997. Retrieved 13 January 2023.
  33. ^ Baetjer, Howard (24 August 2016). "The Welfare Cliff and Why Many Low-Income Workers Will Never Overcome Poverty". Learn Liberty.
  34. ^ "Hacktoberfest 2020". Laravel News. 25 September 2020. Retrieved 31 January 2021.
  35. ^ Claburn, Thomas. "Open-source devs drown in DigitalOcean's latest tsunami of pull-request spam that is Hacktoberfest". The Register. Retrieved 29 February 2024.
  36. ^ David Segal (26 November 2010). "For DecorMyEyes, Bad publicity is a good thing". New York Times.
  37. ^ Segal, David (2 May 2021). "Has Online Retail's Biggest Bully Returned?". The New York Times. Retrieved 3 May 2021.
  38. ^ III, Carl C. Swisher; Curtis, Garniss H.; Lewin, Roger (2001). Java Man: How Two Geologists Changed Our Understanding of Human Evolution. University of Chicago Press. ISBN 978-0226787343.
  39. ^ Mark Zwonitzer, writer, PBS American Experience documentary "Transcontinental Railroad" (2006) "Program Transcript . Transcontinental Railroad . WGBH American Experience" Archived 30 January 2017 at the Wayback Machine
  40. ^ Department for Communities and Local Government (2002). "Fire" Archived 2004-08-01 at the Wayback Machine. In Consultation on the Local Government Finance Formula Grant Distribution. Retrieved November 10, 2006.
  41. ^ Mark Twain (2010), Michael J. Kiskis (ed.), Mark Twain's Own Autobiography: The Chapters from the North American Review, University of Wisconsin Press, pp. 151–152, ISBN 978-0299234737

Further reading