6 ms·

Classic perverse incentive failure. Most famous example is called the “cobra effect.” In the 1800’s some towns in India had a problem with cobra infestation, s

Classic perverse incentive failure. Most famous example is called the “cobra effect.” In the 1800’s some towns in India had a problem with cobra infestation, so the governement offered a bounty for dead cobras. People started farming cobras to collect the bounty. Eventually too many dead snakes were being turned in, so the government stopped paying. As a result, the newly made “cobra farmers” just released all the cobras on to the streets, doubling the population.

viscountchocula 4y ago
Is it, though? By making disclosure a requirement, the market for sesame-free items is highlighted and elevated. It may find a profitable niche or it may not, but consumers are now better able to choose.
- ocdtrekkie 4y ago
  Allergy labeling is likely a bit like support for people with disabilities: We regulate because the market doesn't work in these cases. The number of people who require accommodations are smaller than the value to make accommodating their needs profitable, so we use regulate because it's the right thing to do.
  - rayiner 4y ago
    To be clear, we do it through the government because it’s otherwise inefficient: it imposes a bigger collective cost on society than the benefit to the individuals. Whether “it’s the right thing to do” is a moral construct. European countries, for example, have much narrower requirements for accommodation of people with disabilities than the ADA.
    - magicalist 4y ago
      Though maybe more pertinent, the EU has required sesame allergen labeling since 2003.
  - coryrc 4y ago
    The basis of the (edit: theoretical) free market is full information for all participants, which requiring more information on the label is helpful for. The problem here is they won't allow "may contain traces of X" as a valid acknowledgement, despite being easy to understand.
    - xyzzyz 4y ago
      > The basis of the free market is full information for all participants, It’s not, and in fact it is opposite of truth. The reason, for example, why free market economy works better than centrally planned one, is precisely that obtaining full knowledge is impossible, so it is impossible to effectively centrally plan, whereas in market economy, each individual contributes their own private knowledge that is unavailable to other people, through participating in market and communicating it through price mechanism. See, for example, Thomas Sowell’s “Knowledge and Decisions”, which is precisely about this point, or for more classic reference, Hayek’s “The Use of Knowledge in Society”. Again, to reiterate, the entire point of market economy is that nobody has full knowledge.
      - coryrc 4y ago
        Perhaps I'm sloppy with my terminology, but https://en.m.wikipedia.org/wiki/Perfect_competition https://en.m.wikipedia.org/wiki/Perfect_competition seems to agree more with my statement than yours.
        adventured 4y ago
        Perfect competition can never exist. There is no scenario where market participants (which make the market) will each have perfect knowledge and act perfectly upon that knowledge. Along with sometimes being smart or hard working, people are also sometimes lazy, dumb, irrational, careless, destructive, and so on. The point being, there is a wide variety and they bring their messy contributions to the market, which makes for a very messy market. There can never be perfect anything. It's not even a good theory, it's garbage, it would only work in a simplistic simulation with no chaos. Perfection competition theory is incorrect, badly flawed in a similar manner, as the efficient market hypothesis [1]. [1] https://en.wikipedia.org/wiki/Efficient-market_hypothesis https://en.wikipedia.org/wiki/Efficient-market_hypothesis
magicalist 4y ago
And as usual with these nice simple narratives, there's no evidence this actually happened (and compelling evidence that it didn't): https://www.reddit.com/r/AskHistorians/comments/pmjrdg/is_there_evidence_for_the_cobra_effect_story/ https://www.reddit.com/r/AskHistorians/comments/pmjrdg/is_th...
- lifeisstillgood 4y ago
  That link is the neatest answer I have read in ages - this whole story could easily become a hour long tv show
- m000 4y ago
  Something very similar did happen though, during the "Great Hanoi Rat Massacre" [1]. [1] https://en.wikipedia.org/wiki/Great_Hanoi_Rat_Massacre#Hiring_vigilantes_and_the_unintended_consequences https://en.wikipedia.org/wiki/Great_Hanoi_Rat_Massacre#Hirin...
  - rcv 4y ago
    Reminds me of that people who are 3D printing firearms and parts to sell off at gun buyback programs [1][2] [1] https://www.theguardian.com/us-news/2022/oct/11/new-york-gun-buyback-rules-3d-printed-parts https://www.theguardian.com/us-news/2022/oct/11/new-york-gun... [2] https://www.vice.com/en/article/akee4e/someone-made-dollar3000-selling-3d-printed-guns-at-a-gun-buyback-event https://www.vice.com/en/article/akee4e/someone-made-dollar30...
- fragmede 4y ago
  Reading your link, the bounty was real actual thing that happened, it's that the farming of snakes isn't something that was proven to be happening. The link actually says that deaths increased due to an unintended consequence of the bounty system, just for different reasons than is usually mentioned.
  - magicalist 4y ago
    The post says deaths in _houses_ increased due to snake habitat destruction that drove them there. It suggests that could be because of snake death awareness raised by the bounty system, but that feels a step too removed to call it an "unintended consequence". It's not due to a perverse incentive regardless, though, which is what the original anecdote is supposed to exemplify.

viscountchocula 4y ago

Is it, though? By making disclosure a requirement, the market for sesame-free items is highlighted and elevated. It may find a profitable niche or it may not, but consumers are now better able to choose.

ocdtrekkie 4y ago
Allergy labeling is likely a bit like support for people with disabilities: We regulate because the market doesn't work in these cases. The number of people who require accommodations are smaller than the value to make accommodating their needs profitable, so we use regulate because it's the right thing to do.
- rayiner 4y ago
  To be clear, we do it through the government because it’s otherwise inefficient: it imposes a bigger collective cost on society than the benefit to the individuals. Whether “it’s the right thing to do” is a moral construct. European countries, for example, have much narrower requirements for accommodation of people with disabilities than the ADA.
  - magicalist 4y ago
    Though maybe more pertinent, the EU has required sesame allergen labeling since 2003.
- coryrc 4y ago
  The basis of the (edit: theoretical) free market is full information for all participants, which requiring more information on the label is helpful for. The problem here is they won't allow "may contain traces of X" as a valid acknowledgement, despite being easy to understand.
  - xyzzyz 4y ago
    > The basis of the free market is full information for all participants, It’s not, and in fact it is opposite of truth. The reason, for example, why free market economy works better than centrally planned one, is precisely that obtaining full knowledge is impossible, so it is impossible to effectively centrally plan, whereas in market economy, each individual contributes their own private knowledge that is unavailable to other people, through participating in market and communicating it through price mechanism. See, for example, Thomas Sowell’s “Knowledge and Decisions”, which is precisely about this point, or for more classic reference, Hayek’s “The Use of Knowledge in Society”. Again, to reiterate, the entire point of market economy is that nobody has full knowledge.
    - coryrc 4y ago
      Perhaps I'm sloppy with my terminology, but https://en.m.wikipedia.org/wiki/Perfect_competition https://en.m.wikipedia.org/wiki/Perfect_competition seems to agree more with my statement than yours.
      - adventured 4y ago
        Perfect competition can never exist. There is no scenario where market participants (which make the market) will each have perfect knowledge and act perfectly upon that knowledge. Along with sometimes being smart or hard working, people are also sometimes lazy, dumb, irrational, careless, destructive, and so on. The point being, there is a wide variety and they bring their messy contributions to the market, which makes for a very messy market. There can never be perfect anything. It's not even a good theory, it's garbage, it would only work in a simplistic simulation with no chaos. Perfection competition theory is incorrect, badly flawed in a similar manner, as the efficient market hypothesis [1]. [1] https://en.wikipedia.org/wiki/Efficient-market_hypothesis https://en.wikipedia.org/wiki/Efficient-market_hypothesis

magicalist 4y ago

And as usual with these nice simple narratives, there's no evidence this actually happened (and compelling evidence that it didn't): https://www.reddit.com/r/AskHistorians/comments/pmjrdg/is_there_evidence_for_the_cobra_effect_story/ https://www.reddit.com/r/AskHistorians/comments/pmjrdg/is_th...

lifeisstillgood 4y ago
That link is the neatest answer I have read in ages - this whole story could easily become a hour long tv show
m000 4y ago
Something very similar did happen though, during the "Great Hanoi Rat Massacre" [1]. [1] https://en.wikipedia.org/wiki/Great_Hanoi_Rat_Massacre#Hiring_vigilantes_and_the_unintended_consequences https://en.wikipedia.org/wiki/Great_Hanoi_Rat_Massacre#Hirin...
- rcv 4y ago
  Reminds me of that people who are 3D printing firearms and parts to sell off at gun buyback programs [1][2] [1] https://www.theguardian.com/us-news/2022/oct/11/new-york-gun-buyback-rules-3d-printed-parts https://www.theguardian.com/us-news/2022/oct/11/new-york-gun... [2] https://www.vice.com/en/article/akee4e/someone-made-dollar3000-selling-3d-printed-guns-at-a-gun-buyback-event https://www.vice.com/en/article/akee4e/someone-made-dollar30...
fragmede 4y ago
Reading your link, the bounty was real actual thing that happened, it's that the farming of snakes isn't something that was proven to be happening. The link actually says that deaths increased due to an unintended consequence of the bounty system, just for different reasons than is usually mentioned.
- magicalist 4y ago
  The post says deaths in _houses_ increased due to snake habitat destruction that drove them there. It suggests that could be because of snake death awareness raised by the bounty system, but that feels a step too removed to call it an "unintended consequence". It's not due to a perverse incentive regardless, though, which is what the original anecdote is supposed to exemplify.