Goodhart’s Law

Questions

What is Goodhart’s Law?

Goodhart's Law, named after economist Charles Goodhart, says that when a measure becomes a target, it ceases to be a good measure. People find ways to hit the number without improving what it stood for, as Britain found when it targeted money supply, and as Toshiba's profit challenges showed.

How do you use Goodhart’s Law?

Use it whenever you set goals: pair each target with a quality check, focus on habits rather than single numbers, and revisit targets once they start being gamed.

When does Goodhart’s Law matter?

Goodhart’s Law is one of the 40 mental models for fixing problems, the situations where you ask: Why does this keep going wrong, and how do I fix it for good? Within that, it belongs to “Rewards and rules”, alongside Cap and Trade, Coase Theorem and Government Failure.

What is an example of Goodhart’s Law?

Two stories show it at work: Targeting sterling M3 (1975–1980s) and Toshiba (2015). Both are told in full in The Mental Models Daily Almanac, which has two stories for each of its 365 models.

Which mental models are related to Goodhart’s Law?

Proxy, Cobra Effect and Potemkin Village. Goodhart’s Law itself comes from economics.