Goodhart's Law is one of those neat formulations that codifies something I've been trying to put my finger on for years: "once a social or economic indicator or other surrogate measure is made a target for the purpose of conducting social or economic policy, then it will lose the information content that would qualify it to play such a role."
That is, once you start measuring GDP as a way of gauging social welfare, people will start to figure out ways to make GDP go up without improving social welfare (say, by swapping dirty financial derivatives). Once Google starts measuring inbound links as a way of evaluating the importance of web-pages, people will figure out how to increase the inbound links to unimportant pages (splogging, blogspam). And once you measure fat or calorie content as a proxy for the healthfulness of food, manufacturers will figure out how to decrease fat and calories without making the food more healthful (reducing fat by adding sugar, reducing calories by adding poisonous artificial sweeteners).
The law was first stated in a 1975 paper by Goodhart and gained popularity in the context of the attempt by the United Kingdom government of Margaret Thatcher to conduct monetary policy on the basis of targets for broad and narrow money, but the idea is considerably older. It is implicit in the economic idea of rational expectations. While it originated in the context of market responses the Law has profound implications for the selection of high-level targets in organisations.
The landlords at City Park Apartments stuck memos on their tenants’ doors last week, outlining a “Facebook addendum” requiring tenants to Friend the building on Facebook or lose their lease.
Ruth writes, “The link tax is back, but we have a chance to stop it. The Save the Link network are pushing back against proposals in the EU for a new hyperlinking fee (AKA ‘ancillary copyright’) that will affect us all. If lobbyists succeed copyright rules will be extended to hyperlinks – giving publishers the […]
Big telcos and cable operators demand the right to impose data caps that punish their most enthusiastic customers for using too much Internet (with exceptions to the caps made for services that have paid bribes for “preferred carriage” of course), and they say that it’s simple economics: if you use up more of a service, […]
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