Goodhart's law

Goodhart's law is an adage often stated as, "When a measure becomes a target, it ceases to be a good measure". 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: "Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes."

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, but the law reflects a much more general phenomenon.

Priority and background
Numerous concepts are related to this idea, at least one of which predates Goodhart's statement. Notably, Campbell's law likely has precedence, as Jeff Rodamar has argued, since various formulations date to 1969. Other academics had similar insights at the time. Jerome Ravetz's 1971 book Scientific Knowledge and Its Social Problems also predates Goodhart, though it does not formulate the same law. He discusses how systems in general can be gamed, focuses on cases where the goals of a task are complex, sophisticated, or subtle. In such cases, the persons possessing the skills to execute the tasks properly seek their own goals to the detriment of the assigned tasks. When the goals are instantiated as metrics, this could be seen as equivalent to Goodhart and Campbell's claim.

Shortly after Goodhart's publication, others suggested closely related ideas, including the Lucas critique (1976). As applied in economics, the law is also implicit in the idea of rational expectations, a theory in economics that states that those who are aware of a system of rewards and punishments will optimize their actions within that system to achieve their desired results. For example, if an employee is rewarded by the number of cars sold each month, they will try to sell more cars, even at a loss.

While it originated in the context of market responses, the law has profound implications for the selection of high-level targets in organizations. Jon Danielsson states the law as

"Any statistical relationship will break down when used for policy purposes."

He suggested a corollary for use in financial risk modelling:

"A risk model breaks down when used for regulatory purposes."

Mario Biagioli related the concept to consequences of using citation impact measures to estimate the importance of scientific publications:

"All metrics of scientific evaluation are bound to be abused. Goodhart's law states that when a feature of the economy is picked as an indicator of the economy, then it inexorably ceases to function as that indicator because people start to game it."

The law is illustrated in the 2018 book The Tyranny of Metrics by Jerry Z. Muller.

Generalization
Later writers generalized Goodhart's point about monetary policy into a more general adage about measures and targets in accounting and evaluation systems. In a book chapter published in 1996, Keith Hoskin wrote:

"'Goodhart's Law' – That every measure which becomes a target becomes a bad measure – is inexorably, if ruefully, becoming recognized as one of the overriding laws of our times. Ruefully, for this law of the unintended consequence seems so inescapable. But it does so, I suggest, because it is the inevitable corollary of that invention of modernity: accountability."In a 1997 paper responding to the work of Hoskin and others on financial accounting and grades in education, anthropologist Marilyn Strathern expressed Goodhart's Law as "When a measure becomes a target, it ceases to be a good measure," and linked the sentiment to the history of accounting stretching back into Britain in the 1800s:"When a measure becomes a target, it ceases to be a good measure. The more a 2.1 examination performance becomes an expectation, the poorer it becomes as a discriminator of individual performances. Hoskin describes this as 'Goodhart's law', after the latter's observation on instruments for monetary control which led to other devices for monetary flexibility having to be invented. However, targets that seem measurable become enticing tools for improvement. The linking of improvement to commensurable increase produced practices of wide application. It was that conflation of 'is' and 'ought', alongside the techniques of quantifiable written assessments, which led in Hoskin's view to the modernist invention of accountability. This was articulated in Britain for the first time around 1800 as 'the awful idea of accountability' (Ref. 3, p. 268)."

Examples

 * . The statement denounces several problems in science and as Goodhart's law explains, one of them is that measurement has become a target. The correlation between h-index and scientific awards is decreasing since widespread usage of h-index.
 * International Union for Conservation of Nature's measure of extinction can be used to remove environmental protections, which resulted in IUCN becoming more conservative in labeling something as extinct.
 * According to How to Read Numbers, the law applied to the British government response to the COVID-19 pandemic when it announced a target of 100,000 COVID-19 tests per day—initially a target for tests actually carried out and later for maximum capacity of test-taking. The number of useful diagnostic tests was far lower than the government-reported number when it announced it had met the target.