Goodhart's lawWikipedia open wikipedia design.
Goodhart's law is an adage named after economist Charles Goodhart, which has been phrased by Marilyn Strathern as "When a measure becomes a target, it ceases to be a good measure." One way in which this can occur is individuals trying to anticipate the effect of a policy and then taking actions that alter its outcome.
Formulation and Precedence
Goodhart first advanced the idea in a 1975 article, which later became used popularly to criticize the United Kingdom government of Margaret Thatcher for trying to conduct monetary policy on the basis of targets for broad and narrow money.[clarification needed] His original formulation was:
Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes.
However, there have been numerous concepts related to this idea, at least one of which pre-dates Goodhart's statement in 1975. Notably, Campbell's law likely has precedence, as Jeff Rodamar has argued, since various formulations date to 1969.  Other academics had similar insights during this time period. Jerome R. Ravetz's 1971 book Scientific Knowledge and Its Social Problems also predates Goodhart, though it does not formulate the same law. He discusses how systems in general can be gamed, focuses on cases where the goals of a task are complex, sophisticated, or subtle. In such cases, the persons possessing the skills to execute the tasks properly are instead able to achieve their own goals to the detriment of the assigned tasks. When the goals are instantiated as metrics, this could be seen as equivalent to Goodhart and Campbell's claim.
Shortly after Goodhart's publication, others suggested closely related ideas, including the Lucas critique (1976). As applied in economics, the law is also implicit in the economic idea of rational expectations, a theory in economics that states that those who are aware of a system of rewards and punishments will optimize their actions within that system to achieve their desired results. For example, if an employee is rewarded by the number of cars she sells each month, she will try to sell more cars, whether or not she makes a profit on any.
While it originated in the context of market responses, the law has profound implications for the selection of high-level targets in organizations. Jón Danı́elsson quotes the law as "Any statistical relationship will break down when used for policy purposes" and suggests a corollary to the law for use in financial risk modelling: "A risk model breaks down when used for regulatory purposes." Mario Biagioli has related the concept to consequences of using citation impact measures to estimate the importance of scientific publications:
All metrics of scientific evaluation are bound to be abused. Goodhart's law (named after the British economist who may have been the first to announce it) states that when a feature of the economy is picked as an indicator of the economy, then it inexorably ceases to function as that indicator because people start to game it.
The law is richly illustrated in the 2018 book The Tyranny of Metrics by Jerry Z. Muller.
- Campbell's law
- Reflexivity (social theory)
- Reification (fallacy)
- Cobra effect
- McNamara fallacy
- Strathern, Marilyn. "Improving Ratings: Audit in the British University System". European Review. 5 (3): 305–321. doi:10.1002/(SICI)1234-981X(199707)5:3%3C305::AID-EURO184%3E3.0.CO;2-4.
- Manheim, David; Garrabrant, Scott (2018). "Categorizing Variants of Goodhart's Law". arXiv:1803.04585 [cs.AI].
- Goodhart, Charles (1981). "Problems of Monetary Management: The U.K. Experience". In Courakis, Anthony S. (ed.). Inflation, Depression, and Economic Policy in the West. pp. 111–146. ISBN 978-0-389-20144-1.
- "Overpowered Metrics Eat Underspecified Goals". Ribbonfarm. Accessed 26 January 2017.
- Rodamar, Jeffrey (November 2018). "There ought to be a law! Campbell versus Goodhart". Significance. doi:10.1111/j.1740-9713.2018.01205.x.
- Ravetz, Jerome R. (1971). Scientific Knowledge and Its Social Problems. Transaction Publishers. pp. 295–296. ISBN 978-1-4128-3378-3.
- Goodhart, C. A. E. (1975). "Problems of Monetary Management: The U.K. Experience". Papers in Monetary Economics. I. Reserve Bank of Australia.
- Daníelsson, Jón (July 2002). "The Emperor Has No Clothes: Limits to Risk Modelling". Journal of Banking & Finance. 26 (7): 1273–1296. CiteSeerX 10.1.1.27.3392. doi:10.1016/S0378-4266(02)00263-7.
- Biagioli, Mario (12 July 2016). "Watch out for cheats in citation game" (PDF). Nature. 535 (7611): 201. Bibcode:2016Natur.535..201B. doi:10.1038/535201a. PMID 27411599.
- Muller, Jerry Z. (2018). The Tyranny of Metrics. Princeton University Press. ISBN 978-0-691-19126-3.
- Chrystal, K. Alec; Mizen, Paul D. (November 12, 2001). "Goodhart's Law: Its Origins, Meaning and Implications for Monetary Policy" (PDF).
- Manheim, David; Garrabrant, Scott (2018). "Categorizing Variants of Goodhart's Law". arXiv:1803.04585. Bibcode:2018arXiv180304585M. Cite journal requires
- Manheim, David (June 9, 2016). "Goodhart's Law and Why Measurement is Hard'".
- Planet Money Episode 877: "The Laws Of The Office", 21 November 2018, NPR