The Cobra Effect: When Solutions Make Problems Worse

Why did a cash reward for killing snakes end up tripling the snake population? Discover the "Cobra Effect," history’s harshest lesson on perverse incentives.

Sometimes, the most logical solution to a problem ends up causing a disaster. In economics, this phenomenon is known as the "Cobra Effect," named after a peculiar and catastrophic event in British-ruled India. At the time, the city of Delhi was plagued by an infestation of venomous cobras. The British colonial government, concerned for public safety, devised a solution based on simple market principles: they offered a cash bounty for every dead cobra turned in.

On paper, the plan was brilliant. The incentives aligned perfectly; the public would hunt snakes to earn money, and the government would get a cobra-free city. Initially, it worked. The number of snakes dwindled. However, the British officials underestimated the entrepreneurial spirit of the locals. Once the easy-to-catch snakes were gone, people realized it was far more efficient to breed cobras than to hunt them. Enterprising locals set up clandestine cobra farms in their backyards, raising the snakes solely to kill them and collect the bounty. The government was unknowingly funding the mass production of the very pest they were trying to eradicate.

When the authorities eventually caught on to the scheme, they immediately canceled the bounty program. But this decision triggered the final blow. The snake breeders, now stuck with thousands of worthless cobras that were expensive to feed, simply released them into the wild. The result? The cobra population in Delhi was significantly higher after the program than it had been before. This story serves as a cautionary tale for modern economics and management known as a "Perverse Incentive." If you reward people for a metric without understanding human behavior, they will game the system. If you pay a programmer per line of code, they won't write better software; they will just write longer code.

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