The German economist Horst Siebert (1938-2009) recounted a similar (apocryphal) anecdote during British colonial rule in India: in order to curtail the population of venomous cobra snakes, British officials offered a bounty for every dead snake — which ended up fostering an underground cobra breeding market. As the story goes, once the British discontinued the bounty offer, the cobra breeders let their now worthless snakes loose, thus multiplying the very cobra population the colonizers were seeking to eliminate. The ‘cobra effect’ refers to situations when incentives produce outcomes contrary to the intentions for which they were designed.1
Unintended consequences can happen on a massive scale, such as building new highways to alleviate traffic congestion and thereby facilitating more vehicle usage. Personal lifestyle habits often succumb to the cobra effect as well, like justifying a few more potato chips because you drank a diet soda. Today, investigate your objectives and aims for the cobra effect — it is all too easy to bullheadedly seek and assume one outcome, while inadvertently incentivizing the opposite.
Siebert, Horst (2001). Der Kobra-Effekt. Wie man Irrwege der Wirtschaftspolitik vermeidet. Munich: Deutsche Verlags-Anstalt. ↩