Have you ever tried to help someone but by intervening you just made everyone worse off? Though your intentions were good, your actions had unforeseen and unintended consequences? Are you ever left wondering how your plan could have gone so poorly? If you answered yes to the above questions, then join the club of those who have fallen victim to the cobra effect.
The cobra effect refers to instances when the solution to the problem actually makes the problem worse. This is not to say the solutions were shortsighted or based on poor logic. It is merely that people react in unpredictable ways and as such our actions may have unforeseen effects. The cobra effect was named for an incident in colonial India in which the British government sought to decrease the cobra population by offering a reward for every dead snake. Unfortunately, this incentivized people to start breeding cobras in an attempt to increase their reward earnings. While the reward system was quickly shutdown, the snake breeders released the “leftover” cobras, thus increasing the overall population!
Stephen Dubner and Steve Levitt, authors of Freakonomics, explore another instance of incentive systems gone wrong in a podcast. To battle the pollution problem in Mexico the government instituted a law in which only cars with specific license plates could drive on a given day. While in theory this could incentives carpooling or greater utilization of public transit, it ended up causing people to purchase a second, less fuel-efficient car so they could drive everyday. Ultimately this created more pollution since people were still driving everyday, but with less environmentally friendly cars.