Editing Perverse incentive (section)

{{Short description|Incentive with unintended results}}
{{Use dmy dates|date=May 2023}}
[[File:Indiancobra.jpg|right|thumb|An anecdote tells of the British government's bounty on dead [[Indian cobra]]s giving locals the perverse incentive to start breeding the snakes, to be able to kill more of them]]
{{Economics sidebar}}
The phrase "'''perverse incentive'''" is often used in economics to describe an [[incentive]] structure with undesirable results, particularly when those effects are unexpected and contrary to the intentions of its designers.<ref name="brickman22">{{Cite book |last=Brickman |first=Leslie H. |url=https://books.google.com/books?id=R6ocCjZIrrUC |title=Preparing the 21st Century Church |publisher=Xulon Press |year=2002 |isbn=978-1591601678 |pages=326}}</ref>

The results of a perverse incentive scheme are also sometimes called '''cobra effects''', where people are incentivized to make a problem worse. This name was coined by economist [[Horst Siebert]] based on an [[anecdote]] taken from the [[British Raj]].<ref name="siebert32">{{Cite book |last=Siebert |first=Horst |title=Der Kobra-Effekt. Wie man Irrwege der Wirtschaftspolitik vermeidet |publisher=Deutsche Verlags-Anstalt |year=2001 |isbn=3421055629 |location=Munich |language=de}}</ref><ref name="freak22">{{cite web |last=Dubner |first=Stephen J. |date=11 October 2012 |title=The Cobra Effect: A New Freakonomics Radio Podcast |url=http://freakonomics.com/2012/10/11/the-cobra-effect-a-new-freakonomics-radio-podcast/ |accessdate=24 February 2015 |publisher=Freakonomics, LLC}}</ref> The British government, concerned about the number of venomous [[Indian cobra|cobras]] in [[Delhi]], offered a [[Bounty (reward)|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. The cobra breeders set their snakes free, leading to an overall increase in the wild cobra population.<ref name="schwarz222">{{Cite book |last=Schwarz |first=Christian A. |title=NCD Implementation Guide |publisher=Carol Stream Church Smart Resources |year=1996 |pages=126}} Cited in Brickman, p. 326.</ref><ref>{{cite news |last1=Coy |first1=Peter |date=26 March 2021 |title=Goodhart's Law Rules the Modern World. Here Are Nine Examples |url=https://www.bloomberg.com/news/articles/2021-03-26/goodhart-s-law-rules-the-modern-world-here-are-nine-examples |access-date=12 January 2023 |work=Bloomberg.com |language=en}}</ref>

Perverse incentives arise in various fields such as electoral systems, pest eradication campaigns, community safety and harm reduction, environmental and wildlife protection, historical preservation plans, healthcare cost control, humanitarian and welfare policies, promotional plans and publicity. These incentives are often designed to achieve short-term goals, but in the long run, they lead to bigger problems or undermine the original objectives.