The cobra effect occurs when an attempted solution to a problem actually makes the problem worse. I came across this term in a Freakanomics podcast by Stephen J. Dubner and Steven D. Levitt. The term is used to illustrate the causes of incorrect stimulation in economy and politics. There is also a 2001 book with the same title by Horst Siebert, a German economist and professor.
By the way, I am an avid listener and follower of Freaknomics. I am amazed at their ability to combine research, insights and the fine art of storytelling. It’s an invaluable resource for BI & analytics professionals as we help organizations build data-driven cultures.
The term cobra effect began at the time of British rule of colonial India. The British government was concerned about the number of venomous cobra snakes in Delhi. They offered a reward for every dead cobra that was brought to the government leaders. Initially this was successful as a large number of snakes were killed for the reward. Eventually, however, enterprising locals began to breed cobras for the income. When the government became aware of this, the reward program was scrapped, and the cobra breeders set all their cobras free. As a result, the wild cobra population only grew. The apparent solution for the problem made the situation worse.
The same problem has happened with rats in Hanoi, Vietnam and feral pigs in Fort Benning, Georgia. In each case, incentive seekers came up with creative ways to maximize their results – and pest populations grew. Incentives don’t always work out the way we expect them to.
So how does this relate to BI? Are there Cobras of BI? Read more…