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.[2]

Examples of perverse incentives

The original cobra effect

The Indian cobra

The term cobra effect was coined by economist Horst Siebert based on an anecdote of an occurrence in India during British rule.[2][3][4] 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, enterprising 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 now-worthless snakes free, the wild cobra population further increased.[5]

Other examples

In literature

In his autobiography, Mark Twain says that his wife, Olivia Langdon Clemens, had a similar experience:[42]

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. (1 November 2002). Preparing the 21st Century Church. p. 326. ISBN 978-1-59160-167-8.
  2. ^ a b c Siebert, Horst (2001). Der Kobra-Effekt. Wie man Irrwege der Wirtschaftspolitik vermeidet (in German). Munich: Deutsche Verlags-Anstalt. ISBN 3-421-05562-9.
  3. ^ a b Dubner, Stephen J. (11 October 2012). "The Cobra Effect: A New Freakonomics Radio Podcast". Freakonomics, LLC. Retrieved 24 February 2015.
  4. ^ a b c "The Cobra Effect: Good Intentions, Perverse Outcomes". Psychology Today. Retrieved 29 March 2021.
  5. ^ Schwarz, Christian A. (1996). NCD Implementation Guide. Carol Stream Church Smart Resources. p. 126. Cited in Brickman, p. 326.
  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. ^ Mark Zwonitzer, writer, PBS American Experience documentary "Transcontinental Railroad" (2006) "Program Transcript . Transcontinental Railroad . WGBH American Experience"
  8. ^ Protesters in straitjackets demand inquiry of Duplessis Orphans era
  9. ^ Allegations of child abuse
  10. ^ Orphans sue Catholic orders over mistreatment
  11. ^ III, Carl C. Swisher; Curtis, Garniss H.; Lewin, Roger (November 2001). Java Man: How Two Geologists Changed Our Understanding of Human Evolution. University of Chicago Press. ISBN 9780226787343.
  12. ^ Whitlock, Craig (31 August 2021). The Afghanistan Papers: A Secret History of the War. p. 136. ISBN 9781982159023.
  13. ^ Myndans, Seth (25 August 2007). "Cute Kitty Is Pink Badge of Shame in Bangkok". The New York Times. Retrieved 6 November 2007. It is the pink armband of shame for wayward police officers, as cute as it can be, with a Hello Kitty face and a pair of linked hearts.
  14. ^ "RHI scandal: RHI 'cash for ash' scandal to cost NI taxpayers £490m". BBC News. 23 December 2016.
  15. ^ "Stormont crisis: Deadline passes for future of executive". BBC News. 16 January 2017.
  16. ^ Bebchuk, L., & Fried, J. M. (2005) "Executive Compensation at Fannie Mae: A Case Study of Perverse Incentives, Nonperformance Pay, and Camouflage" Journal of Corporation Law, 30 (4): 807–822.
  17. ^ "The Cobra effect in Freakonomics".
  18. ^ 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.
  19. ^ Gupta, Anika. "Carbon credit scam slur on Indian firms". Hindustan Times. Archived from the original on 4 July 2015. Retrieved 2 July 2015.
  20. ^ "Commission adopts ban on the use of industrial gas credits". Climate Action - European Commission. European Commission. 23 November 2016. Retrieved 3 November 2019.
  21. ^ David Segal (26 November 2010). "For DecorMyEyes, Bad publicity is a good thing". New York Times.
  22. ^ Segal, David (2 May 2021). "Has Online Retail's Biggest Bully Returned?". The New York Times. Retrieved 3 May 2021.
  23. ^ Keller, Tony (12 July 2018). "Canada Has Its Own Ways of Keeping Out Unwanted Immigrants". The Atlantic. Retrieved 30 June 2021.
  24. ^ "Hacktoberfest 2020". Laravel News. 25 September 2020. Retrieved 31 January 2021.
  25. ^ Portfolio, Hwee's. "#Shitoberfest: How free T-shirts ruined #Hacktoberfest2020". ongchinhwee.me. Retrieved 31 January 2021.
  26. ^ "How One Guy Ruined #Hacktoberfest2020 #Drama". joel.net - JavaScript, ReactJS, and Node. Retrieved 31 January 2021.
  27. ^ 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):S227–59. doi:10.1086/692070.
  28. ^ Stephen Dubner and Steven Levitt, Unintended Consequences, New York Times Magazine, 20 January 2008
  29. ^ 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.
  30. ^ James C. Robinson, Reinvention of Health Insurance in the Consumer Era (2004). In JAMA, April 21, 2004; 291: 1880–1886. Retrieved 2008-01-12
  31. ^ 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.
  32. ^ "Gassing up the welfare trap machine", 6 January 1997, Atlantic Institute for Market Studies
  33. ^ Baetjer, Howard (24 August 2016). "The Welfare Cliff and Why Many Low-Income Workers Will Never Overcome Poverty". Learn Liberty.
  34. ^ Treisman, Rachel (4 March 2021). "California Program Giving $500 No-Strings-Attached Stipends Pays Off, Study Finds". NPR.
  35. ^ Allas, Tera; Maksimainen, Jukka; Manyika, James; Singh, Navjot. "An experiment to inform universal basic income". McKinsey and Company.
  36. ^ Konish, Lorie (21 August 2021). "PERSONAL FINANCE How one universal basic income experiment is helping the homeless get off the streets". CNBC.
  37. ^ Cox, David. "Canada's forgotten universal basic income experiment". BBC. Retrieved 29 December 2021.
  38. ^ Thomas, Jake (4 December 2018). "Oregon senator to introduce bill to thwart return of bottles, cans bought in Washington". The Columbian. Retrieved 21 May 2019.
  39. ^ "Bristol Jacobean ceiling 'destroyed before listings visit'". BBC News. 1 September 2017.
  40. ^ "Press release: Developer mutilates Jacobean ceiling to avoid potential listing". Save Britain's Heritage. 31 August 2017.
  41. ^ "Още един кардиолог уличен в поставяне на стентове на здрави пациенти".
  42. ^ Mark Twain (2010), Michael J. Kiskis (ed.), Mark Twain's Own Autobiography: The Chapters from the North American Review, University of Wisconsin Press, pp. 151–2, ISBN 9780299234737

Further reading