Wisdomly
Nº 083Economics

The moment you reward a number, the number stops telling the truth

A British economist's throwaway line about monetary policy turned into one of the few laws that seems to hold everywhere.

In 1975, Charles Goodhart, an economist advising on UK monetary policy, made an observation that had nothing to do with schools, hospitals, or call centers: any statistical relationship the central bank tried to use as a policy target would break down precisely because it had become a target. Squeeze the money supply to hit a number, and people change their behavior around money in ways that make the number meaningless.

Anthropologist Marilyn Strathern later gave it the phrasing that stuck: when a measure becomes a target, it ceases to be a good measure. Teachers narrow their curriculum to what's tested. Call-center staff hang up on hard questions to protect their average handling time. Hospitals discharge patients early enough to avoid triggering a bad statistic. In every case, the underlying thing anyone actually cared about, learning, service, health, was never the thing being optimized. The number was.

The uncomfortable part isn't that people game metrics. It's that gaming them is often the rational response to how the metric was built, which means the fix was never going to be a stricter rule. It was a better question about what you're actually trying to measure.