Charles Goodhart speaking at a conference in 2012. Goodhart's law is named after him.
Goodhart's law is an idea in economics and statistics. It says that a way of measuring success can become less useful when people try to improve the measurement itself, instead of what it is meant to measure. The law is often described by the words: "When a measure becomes a target, it ceases to be a good measure."
The idea is named after Charles Goodhart, a British economist. It was first used to explain problems with government decisions about money and the economy. It is now also used to explain problems in education, business, and other areas.
History
Charles Goodhart described the main idea in a paper published in 1975. He was studying how governments and central banks use numbers to make decisions about money.
He noticed a problem. A number might help people understand what is happening in the economy. But when a government tries to control that number, people may change how they behave. The number may then become less useful for understanding the economy. In 1997, Marilyn Strathern used the well-known wording of the law in a paper about how universities are evaluated.
How it works
People often use numbers to find out how well something is working. For example, school may use test scores to see how much its students have learned. Problems can happen when improving the number becomes more important than the original goal .
This can happen in steps:
People choose a number to measure success.
They set a target for that number.
People change what they do to reach the target.
The number improves, but the original goal may not improve as much...
The problem is that a number cannot always show everything that matters.
A graph using made-up data. Higher scores often go with higher quality , but a high score does not always mean high quality.
Examples
Schools
A school wants its students to learn more. It uses exam scores to measure learning. If the school is judged only by these scores, teachers may spend more time preparing students for exams and less time teaching other useful things. The scores may rise, even if the students have not learned as much as the scores suggest. This is an example of how a measurement can become less useful when it becomes a target.
Factories
Imagine a factory that makes chairs. Its managers want the factory to make more useful chairs, so they count how many chairs are made each day. If workers are rewarded only for making more chairs, they may work faster and make chairs of lower quality. The factory may produce more chairs, but the chairs may not be as good.
Why it matters
Goodhart's law is a warning about using numbers to judge success. It helps explain why a target can sometimes lead to results that were not wanted. The law does not mean that measuring things is bad. Numbers can be very useful. The problem is using a number as if it tells the whole story. One way to reduce this problem is to look at more than one measure of success. It can also help to check whether the original goal is really being reached.
12Chrystal, K. Alec; Mizen, Paul D. (2003). "Goodhart's Law: Its Origins, Meaning and Implications for Monetary Policy". In Paul Mizen (ed.), Central Banking, Monetary Theory and Practice: Essays in Honour of Charles Goodhart, Vol. 1. Edward Elgar, pp. 221–243. doi:10.4337/9781781950777.00022.
