Goodhearts and Unintended Consequences

Measuring performance is and always will be a critical component of business, government, and personal welfare. Unfortunately, the metrics used to measure progress or lack thereof are simultaneously valuable and useless.

There are thousands of examples of bad metric use in business and government- and we’ll get there- but first, think about the metrics that you track for yourself.

When you scan your barcode at the front desk of the gym, the app keeps track of how many visits you’ve made this week.

Perhaps you set spending goals and limit your grocery spend for the month, this budget lets you know how well you’re doing at any point in time.

Now, think of the things we do to cheat the system and game our own metrics. For example, maybe you set a goal of 3 gym visits per week and you check in on three occasions but spend the entire time in the locker room talking to a friend. By all accounts, objectively, you’ve met your goal of going to the gym and checking in 3 times. Your app is congratulating you on your success- but we know that walking into the gym is not the same as working out at the gym.

Using the second example, it’s great to have a budget for frequently used categories like grocery shopping, gas, entertainment, etc. but consider what often happens when one is close to…