Goodhart's law

Not to be confused with Godwin's law.

Goodhart's law is an adage often stated as, "When a measure becomes a target, it ceases to be a good measure".[1] It is named after British economist Charles Goodhart, who is credited with expressing the core idea of the adage in a 1975 article on monetary policy in the United Kingdom:[2]

Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes.[3]

It was used to criticize the British Thatcher government for trying to conduct monetary policy on the basis of targets for broad and narrow money,[4] but the law reflects a much more general phenomenon.[5]

  1. ^ Cite error: The named reference Strathern1997 was invoked but never defined (see the help page).
  2. ^ Goodhart, Charles (1975). "Problems of Monetary Management: The UK Experience". Papers in Monetary Economics. Papers in monetary economics 1975; 1; 1. - [Sydney]. - 1975, p. 1-20. Vol. 1. Sydney: Reserve Bank of Australia.
  3. ^ Goodhart, Charles (1975). "Problems of Monetary Management: The UK Experience". In Courakis, Anthony S. (ed.). Inflation, Depression, and Economic Policy in the West. Totowa, New Jersey: Barnes and Noble Books (published 1981). p. 116. ISBN 0-389-20144-8.
  4. ^ Smith, David (1987). The Rise And Fall of Monetarism. London: Penguin Books. ISBN 9780140227543.
  5. ^ Manheim, David; Garrabrant, Scott (2018). "Categorizing Variants of Goodhart's Law". arXiv:1803.04585 [cs.AI].