What is the name for this uncontested economic aphorism?
July 25, 2019 5:23 AM   Subscribe

The first line of a recent news article critiquing Canada’s international economic competitive advantage says “It is a well-known and uncontested economic aphorism that you will get more of whatever you officially incentivize.” What is the actual economic or theoretical term for this aphorism?

Smart Mefites who understand economic theory, can you explain what specific aphorism the writer is referring to? And if it is “almost” uncontested, how so?

If you google the article, you’ll see it’s written by a contentious but nonetheless prolific Canadian.

I deliberately excluded that context because I am only interested in understanding that single statement.
posted by OlivesAndTurkishCoffee to Law & Government (8 answers total)
 
Sounds like Goodhart's Law, originally formulated as "Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes."
posted by meaty shoe puppet at 5:33 AM on July 25, 2019 [1 favorite]


I read that sentence as a slightly wordy and awkward attempt to repeat the idea that "incentives matter".

"Incentives matter" is a very widely-used phrase among economist-y types.

See, for example: Google, NYT, Economist, many posts on this well-known blog, etc etc.
posted by matthewr at 6:01 AM on July 25, 2019 [2 favorites]


I agree that it's Goodhart's Law, with a dollop of the cobra effect.
posted by Etrigan at 6:03 AM on July 25, 2019


I think it's just "incentives matter." Goodhart's law seems far too advanced, although the context might change that.
posted by internet fraud detective squad, station number 9 at 6:19 AM on July 25, 2019 [1 favorite]


Also, Goodhart's law is sort of more...I don't know how to explain it well but it's just far more complex as an insight about human behavior than the idea that incentivizing something will make people do more of it.

The irony implied by the quote is somewhat different:

Condition X causes a lot of costs for society. Some of these costs are created by the fact that people with condition x are also in poverty. So, in order to minimize the costs of condition x, people with condition x get cash from the government. While giving people with condition x money limits the costs of condition x for individuals with condition x, it makes condition x more appealing. Overall, the likelihood of people having condition x increases as a result. This may lead to an increase in the overall costs of condition x for society to increase.

The basic idea, though, is just that homo economicus is a thing and that if you give people money to do something, more of them will do it.

Calling it "almost" uncontested is a bit cheeky. The simplification of human behavior that is homo economicus has been contested (or many would say, refined) by an entire field of economics (behavioral economics).

It is also the case that most economists would probably chafe at the idea that you can equate "officially incentivizing" condition x with "making x more attractive." It obviously depends on the circumstances and on other costs and benefits of X, even to to homo economicus.
posted by internet fraud detective squad, station number 9 at 6:37 AM on July 25, 2019 [1 favorite]


I thought the use of "officially" suggests Goodhart's law. But I think this seems is article (sentence is actually "It is a well-known and almost uncontested economic aphorism that you will get more of whatever you officially incentivize.")

After reading it, I agree with matthrewr: he's just saying incentives matter. Yes, they do. In other news, puppies are cute and the sun is bright.
posted by Mr.Know-it-some at 7:12 AM on July 25, 2019 [2 favorites]


Yeah, I see from Mr.Know-it-some's link that this is an article by Conrad Black, and he's arguing for lowering taxes and constraining social spending. There's no way he's referring to Goodhart's law; he's just repeating a well-worn conservative talking point.
posted by odin53 at 7:26 AM on July 25, 2019 [1 favorite]


Shoot. Yes, Idid transcribe that wrong! Thanks Mr. Know it some for catching that. Unintentional, but the one word changes the question so thought I’d better pipe up and say as much.

Thanks everyone for your help so far!
posted by OlivesAndTurkishCoffee at 11:54 AM on July 25, 2019


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