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.
Reason's December issue celebrates the magazine's 50th anniversary with a series of commissioned pieces on the past and future of the magazine's subjects: freedom, markets, property rights, privacy and similar matters: I contributed a short story to the issue called Sole and Despotic Dominion, which takes the form of a support chat between a dishwasher […]
At times this week, wildfires made San Francisco's air the worst in the world, and the city's stores have largely sold out of the N95 filter masks that make the air barely breathable, leading to at least one enterprising Uber driver selling the masks out of his car (at a substantial markup: $5 each, compared […]
Amazon is already known for providing dangerous working conditions, anti-union activities and treating their blue collar workforce like a disposable commodity. Since they’re already screwing folks at work, it must have seemed like a natural progression to screw them at home too. From Politico: Amazon’s plans to expand into Long Island City may cost Mayor […]
Ever wondered what it takes to make the transition from amateur photography to a full career? If you answered “a better camera,” you’re half right. Before you get the equipment, get the know-how to use it with the Hollywood Art Institute Photography Course & Certification. Taught by experienced pros, this course is geared towards shutterbugs […]
Anyone can learn piano, but don’t tell that to the bored kids who had to endure hours of “Chopsticks” and similar drills in their music lessons. Today, there’s a better way. Pianoforall lets you jump right in to discover what makes music fun, leaving you eager to learn more. In a simple but innovative approach, […]
There are two times you never want to just “eyeball” it: Conducting brain surgery and matching shades of paint for your walls. Whether you’re painting or repainting, make sure you’re never just “close enough” to the color you want. Not when the Nix Mini Color Sensor can scan and match any color perfectly. Small enough […]