For years I've been intrigued by the behavioral element of economics. One of the more interesting topics is the “cobra effect,” which occurs when an incentive is implemented to modify behavior, but has the opposite consequence of that intended.
The phrase originated in colonial India, where the British government in Delhi decided that in order to reduce the city’s snake infestation, they would pay a bounty for every cobra skin that the citizens turned in. Makes sense, right? It certainly did to the denizens of Delhi, since the population began breeding and farming cobras to turn in for bounties. When the government realized what had happened, they ended the bounty. With no incentive to maintain their farms, the breeders then released the snakes into the city, resulting in a far worse case of cobra infestation than before the bounty was in place. *
But this happened a long time ago, surely governments have learned that incentives don’t always work the way they intend, right? Wrong.
“Texting while driving causes crashes, but state laws banning the practice do not seem to stop drivers from doing it. In fact, such laws might even make things worse by prompting drivers to hide their phones and therefore take their eyes off the road while texting.” **
Both cases are quite fascinating and yet extremely unfortunate.
* http://www.freakonomics.com/2012/10/11/the-cobra-effect-a-new-freakonomics-radio-podcast/
**Wheelan, Charles. Naked Statistics. W.W. Norton & Company, Inc, 2013. Page 88.
The phrase originated in colonial India, where the British government in Delhi decided that in order to reduce the city’s snake infestation, they would pay a bounty for every cobra skin that the citizens turned in. Makes sense, right? It certainly did to the denizens of Delhi, since the population began breeding and farming cobras to turn in for bounties. When the government realized what had happened, they ended the bounty. With no incentive to maintain their farms, the breeders then released the snakes into the city, resulting in a far worse case of cobra infestation than before the bounty was in place. *
But this happened a long time ago, surely governments have learned that incentives don’t always work the way they intend, right? Wrong.
“Texting while driving causes crashes, but state laws banning the practice do not seem to stop drivers from doing it. In fact, such laws might even make things worse by prompting drivers to hide their phones and therefore take their eyes off the road while texting.” **
Both cases are quite fascinating and yet extremely unfortunate.
* http://www.freakonomics.com/2012/10/11/the-cobra-effect-a-new-freakonomics-radio-podcast/
**Wheelan, Charles. Naked Statistics. W.W. Norton & Company, Inc, 2013. Page 88.