Editing 2899: Goodhart's Law
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==Explanation== | ==Explanation== | ||
− | In this comic, [[White Hat]] suggests creating a meta-metric, "number-of-metrics-that-have-become-targets," and making it a target. | + | In this comic, [[White Hat]] suggests creating a meta-metric, "number-of-metrics-that-have-become-targets," and making it a target.d |
− | First, | + | First, the comic introduces and defines {{w|Goodhart's Law}}, which is the observation that when a metric — a {{w|performance indicator|measure of performance}} — becomes a goal, efforts will be unhelpfully directed to improving that ''metric'' at the expense of systemic objectives. |
For example, imagine a scenario in which a car dealership is looking to grow profits, and its managers decide to focus on increasing a component metric of profit: how many cars it sells. So they offer a bonus to their salespeople to sell more cars. But then the salespeople offer deep discounts to rack up sales, rendering the car sales unprofitable. This example shows how a ''metric'' (cars sold) can become the ''target'', replacing the real target, profit growth, if individual incentives are not properly managed. | For example, imagine a scenario in which a car dealership is looking to grow profits, and its managers decide to focus on increasing a component metric of profit: how many cars it sells. So they offer a bonus to their salespeople to sell more cars. But then the salespeople offer deep discounts to rack up sales, rendering the car sales unprofitable. This example shows how a ''metric'' (cars sold) can become the ''target'', replacing the real target, profit growth, if individual incentives are not properly managed. | ||
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White Hat's suggestion could be a good or a bad idea. It all depends on how the bonus incentive is awarded: | White Hat's suggestion could be a good or a bad idea. It all depends on how the bonus incentive is awarded: |