From Wikipedia the free encyclopedia
The cobra effect occurs when incentives designed to solve a problem end up rewarding people for making it worse. The term is used to illustrate how incorrect stimulation in economics and politics can cause unintended consequences.
The term cobra effect originated in an anecdote that describes an occurrence during India under British rule. The British government was concerned about the number of venomous cobras in Delhi. The government therefore offered a bounty for every dead cobra. Initially, this was a successful strategy; large numbers of snakes were killed for the reward. Eventually, however, enterprising people began to breed cobras for the income. When the government became aware of this, the reward program was scrapped. When cobra breeders set their now-worthless snakes free, the wild cobra population further increased.
Effects in history
Rats in Vietnam
A similar incident occurred in Hanoi, Vietnam, under French colonial rule. In 1902, the colonial government created a bounty program that paid a reward for each rat killed. To collect the bounty, people would need to provide the severed tail of a rat.
Colonial officials, however, began noticing rats in Hanoi with no tails. The Vietnamese rat catchers would capture rats, sever their tails, and then release them back into the sewers so that they could procreate and produce more rats, thereby increasing the rat catchers' revenue.
Carbon credits for HFC-23
The UN Intergovernmental Panel on Climate Change kicked off an incentive scheme in 2005 to cut down on greenhouse gases. Companies disposing of polluting gases get rewarded with carbon credits, which could eventually get converted into cash. The program set prices according to how serious the damage the pollutant could do to the environment was, and attributed one of the highest bounties for destroying HFC-23, a byproduct of a common coolant. As a result, companies began to produce more of this coolant in order to destroy more of the byproduct waste gas, and collect millions of dollars in credits. Credits for the destruction of HFC-23 were suspended in the European Union in 2013.
Once in Hartford the flies were so numerous for a time, and so troublesome, that Mrs. Clemens conceived the idea of paying George a bounty on all the flies he might kill. The children saw an opportunity here for the acquisition of sudden wealth. ... Any Government could have told her that the best way to increase wolves in America, rabbits in Australia, and snakes in India, is to pay a bounty on their scalps. Then every patriot goes to raising them.
- Brickman, Leslie H. (1 November 2002). Preparing the 21st Century Church. p. 326. ISBN 978-1-59160-167-8.
- Siebert, Horst (2001). Der Kobra-Effekt. Wie man Irrwege der Wirtschaftspolitik vermeidet (in German). Munich: Deutsche Verlags-Anstalt. ISBN 3-421-05562-9.
- Dubner, Stephen J. (11 October 2012). "The Cobra Effect: A New Freakonomics Radio Podcast". Freakonomics, LLC. Retrieved 24 February 2015.
- Schwarz, Christian A. (1996). NCD Implementation Guide. Carol Stream Church Smart Resources. p. 126. Cited in Brickman, p. 326.
- Vann, Michael G. (2003). "Of Rats, Rice, and Race: The Great Hanoi Rat Massacre, an Episode in French Colonial History". French Colonial History. 4: 191–203. doi:10.1353/fch.2003.0027.
- "The Cobra effect in Freakonomics".
- "Commission adopts ban on the use of industrial gas credits". Climate Action - European Commission. European Commission. 23 November 2016. Retrieved 3 November 2019.
- Mark Twain (2010), Michael J. Kiskis (ed.), Mark Twain's Own Autobiography: The Chapters from the North American Review, University of Wisconsin Press, pp. 151–2, ISBN 9780299234737