Goodhart's Law
en.wikipedia.org
en.wikipedia.org
And we're often not entirely wrong if we do pick reasonable proxies and have reasonable control systems in place. Because throwing up our hands and saying metrics are useless is usually not the answer either.
A particular instance for this has been (to keep it simple) quantity (speed) and quality in production environments (factories and the like). Daily throughput measures paired with less frequent quality measures. The desire is to keep throughput high, and quality ends up suffering as a result. By integrating quality measures into the process you make the two measures compete on more equal footing, forcing a balance. At least one factory I worked in (well, adjacent to, I was in the software portion not the assembly line) massively reduced their quality problems by integrating quality checks between each station. This contrasted with the prior years where throughput, being measured and reacted to daily, drove them to make things so fast that they had piles of rework at the end. Integrating the quality measures between stations slowed them down, but their rework numbers turned into a rounding error (over a decade ago so I've forgotten the exact numbers, but they went from having items needing rework nearly every day to maybe one or two a month). As a result their real (deliverable to customers) production increased and their cost per unit dropped.
The tiers (kwh rates) are in hunks of the a day measured in hours.
But the reporting is only available to the consumer in the form of a monthly bill, so by the time you discover you were eating pixies in the Peak Cost hours the heat wave is over and your bill is already through the roof.
(Any local SoCal residents please feel free to pick my analysis apart, but that was my first take when I heard about the legal action.)
To understand what the big problems are today, you just have to think about the kinds of data which people in government (and the public) haven't been thinking about or aiming for. For example: Happiness, honesty, altruism, sanity... These are not measured and not targeted so they got completely crushed.
In the past, large, powerful religious groups would target these characteristics but nowadays, society is more secular so these aspects of our lives have suffered significantly.
As long as metrics are increasing someone can write shit code and design a bloated product.
"Consider three cases. First, suppose a clever chart-reader thinks he has spotted a pattern in the old price records—say, every January, stock prices tend to rise. Can he get rich on that information, by buying in December and selling in January? Answer: No. If the market is big and efficient then others will spot the trend, too, or at least spot his trading on it. Soon, as more traders anticipate the January rally, more people are buying in December—and then, to beat the trend for a December rally, in November. Eventually, the whole phenomenon is spread out over so many months that it ceases to be noticeable. The trend has vanished, killed by its very discovery. In fact, in 1976 some economists spotted just such a pattern of regular January rallies in the stocks of small companies. Many investors close their losing positions towards the end of the year so they can book the loss as a tax deduction—and the market rebounds when they reinvest early in the new tax year. The effect is most pronounced on small stocks, which are more sensitive to small money movements. Alas, before you rush out to trade on this trend, you should know that its discovery seems to have killed it. After all the academic hoopla over it, it no longer shows up as clearly in price charts."
-Benoit Mandelbrot, The Misbehavior of Markets
Then we begged "Can't we open a couple of presents on Christmas Eve?" So we got to open a few that night.
Next year was "Well, how about Christmas Eve Morning? Maybe just one or two?"
And the next year was "The 23rd is practically Christmas Eve, isn't it? It's just a few hours apart. Can't we open all our presents on the evening of the 23rd?" And we did!
We didn't push it past that: we were already so happy that we got our presents a day and a half before all our friends!
If that's not a law, it should at least be a rule-of-thumb.
One issue is that some things, like vulnerability to supply chain disruptions, are intrinsically harder to track because they are based on rare occurrences. Thus, they will tend to get sacrificed in favor of measures which are more frequent, leading to an emphasis on short-term strategies.
It is wrong to suppose that if you can’t measure it, you can’t manage it – a costly myth.
p. 26 of The New Economics for Industry, Government, EducationIt wasn't Drucker either.
https://medium.com/centre-for-public-impact/what-gets-measur...
This whole mindless must measure, must measure mentality has been criticized since the 50s. Measurement is a tool. There are many tools.
The problem is that people tend to think that all measurement is necessarily quantitative. I think that this might be a version of the streetlight effect? Quantitative measurements tend to be much easier to collect and analyze than qualitative measurements. Oftentimes you can let it all run on autopilot, whereas doing good qualitative work always requires concentration, effort, and expertise.
That would be true, if measurement was free. It never is, and it often is quite costly.
I suppose this is part of why "chaos engineering" has gained popularity- introducing artificial disruptions at a known rate makes it easier to quantify the impact of otherwise-unusual events.
That wasn't Deming’s position, Deming was pretty strong on the idea that there are measurable things that it is not cost effective to measure.
A big contribution of Deming’s here is the importance of understanding uncertainty in measurements relations between them to understand the degree of control.
When you're writing a procurement contract, it's relatively easy to describe what the requested system must do, but almost impossible to enforce a great UI design, as great UI design isn't objectively measurable.
As a contractor, you're optimizing for minimum money spent, so if good design is not required, good design gets sacrificed first.
One solution to this specific problem would be to conduct user surveys on how pleasant the system is to use, requiring a specific score before the contract is deemed completed.
This trend manifests more generally in bigger organizations. Smaller orgs let people judge things subjectively, so all possible aspects are taken into account, making those things relatively good; this is why startups succeed. In a bigger org, there are often objective judgement measures to prevent the influence of personal biases, politics or even bribes. However, those measures poorly reflect how good the thing in question actually is. This is why a big corp might produce worse software, even when competing against a small and underfunded startup.
As an example, Apple exempted the first iPhone crew from most internal company procedures, creating a quasi-startup inside Apple. Steve Jobs always had the final say, and his opinions were based on what he thought personally, not on how many points in a requirements specification were satisfied. I believe this was one of the reasons for the iPhone's success.
This is not limited to governments. Although it's a common naive bias to assert that governments are worse and less efficient than private industry, what is really happening is that government budgets and projects are open to the public, done in the open. For every failed Healthcare.gov, there are dozens of private industry failures that don't make the news because the operations are not subject to the public disclosure rules.
Okay, yeah I'm sure it does. Because it looks terrible and clashes with literally everything on the screen.
"that would mean that KPIs shouldn't be the sole measure of our performance that that doesn't make sense!"
My experience in the field has been that an astounding number of products have been destroyed and users harmed by failing to heed Goodhart's Law.
/s
Edit: but that person is unlikely to be subject to KPIs themselves.
For example, if I'm a manager that can make my people hit their KPIs, and my KPIs are about getting my people to hit theirs, then I'm subject to KPIs, and I like it. It's easier than making my people succeed at what really matters, and it makes me look good.
When KPIs are explicit everyone knows what they are and can modify their behavior to optimize for their KPIs when all measurement goes away the new KPI is the arbitrary one held in the decision makers head, and now instead of it being an explicit bar that can be objectively used to make decisions the entire system falls apart into politics and emphasizing appearances over work because the only thing that matters with implicit KPIs are what everyone else thinks of you, which is much easier to manipulate than the amount of cash you brought in.
You can reduce a fever by treating the underlying infection, soaking in ice water, or taking acetaminophen. No good doctor would judge a patient's health solely because a single metric, namely body temperature, was able to be moved into acceptable ranges. That doesn't mean temperature isn't extremely valuable data, and essential to decision making, but that it cannot be a substitute for understanding and solving the real problem.
I once knew of a SaaS company that had perpetually growing MRR (Monthly Recurring Revenue), great right? Except, churn was also growing. An increase in MRR was achieved by upselling a perpetually shrinking group of core customers. The core KPI of this company was MRR, and, unsurprisingly, this company does not exist anymore. Again, here is a case where we can see all that other data (churn, upselling) is very useful, as is the KPI. But the key to success or failure here is whether or not you want to really expend the effort to understand the problem or just chase a KPI.
KPIs are seductive because they make managing team's performance seem much easier: just get this number higher and you're doing good, get it lower and you're doing bad. But that's like playing a game of chess where each piece is controlled by a different person, and that person is judged solely on how many times they can get the king in check.
That's a good example because as Strathern's formulation notes, the problem lies in make the metric the target. It would be folly to think that reducing a patient's body temperature to the normal range is sufficient for curing illness. GE's Jack Welch famously focused solely on the stock performance as a measure of success. It worked, by that measure GE was wildly successful. By almost any other measure Welch destroyed GE https://www.bnnbloomberg.ca/jack-welch-inflicted-great-damag...
Like I'd agree that maths/cs people are little naive about error but I can't imagine any data scientist from a social science background thinking that any measure is perfect.
Wow, so when I worked at a FAANG, I would say that soc sci people (broadly defined) made up at least a third of the data science org. Data science is a broad church though, and varies a bunch across companies so it's normal I supppose (though strange to me).
Goodhart's Law - https://news.ycombinator.com/item?id=26839177 - April 2021 (2 comments)
Goodhart’s Law Rules the Modern World. Here Are Nine Examples - https://news.ycombinator.com/item?id=26604130 - March 2021 (3 comments)
Goodhart's Law and how systems are shaped by the metrics you chase - https://news.ycombinator.com/item?id=23762526 - July 2020 (58 comments)
When Goodharting Is Optimal - https://news.ycombinator.com/item?id=22054359 - Jan 2020 (3 comments)
Goodhart’s Law: Are Academic Metrics Being Gamed? - https://news.ycombinator.com/item?id=21065507 - Sept 2019 (27 comments)
Goodhart’s Law: Are Academic Metrics Being Gamed? - https://news.ycombinator.com/item?id=20076485 - June 2019 (2 comments)
When targets and metrics are bad for business - https://news.ycombinator.com/item?id=19135694 - Feb 2019 (6 comments)
Goodhart's Law: When a measure becomes a target, it ceases to be a good measure - https://news.ycombinator.com/item?id=17320640 - June 2018 (134 comments)
Goodhart's Law - https://news.ycombinator.com/item?id=10075780 - Aug 2015 (1 comment)
Goodhart's law - https://news.ycombinator.com/item?id=1368745 - May 2010 (1 comment)
I was very young at the time, but I remember basically deriving Goodhart's law after a few months in the job. I don't remember clearly most of the things that led me to that conclusion, but I do remember the most extreme: at some point, management started requiring us to block clearly non-fraudulent phones because the directors decided to increase the blocked installations target. It would include even old contracts by good paying customers that happened to be flagged.
I remember trying to talk to people about this, but the idea that trying to reach a target by any means necessary is usually not a good idea was incomprehensible to most people. Years later, I realized that others knew exactly what was going on; they just didn't care, and I was naive for not seeing that.
It was a few years later when I learned about perverse incentives, Goodhart's law, the cobra effect, etc., and it allowed me to have more productive conversations with people about targets and incentives.
I've always assumed the problem is that the metric is always influenced by other, nontarget variables that become more causally important when the metric becomes a proxy target. So, for example, "gaming the metric" becomes important (in a percent variance sense) after the metric becomes a target. I think the paper's adversarial scenario is closest to this maybe.
They discuss some other factors that seem more relevant to individual cases at any moment in time than an explanation for why a metric's utility might decline over time. In that sense the paper seems to be more about Goodheart-like phenomena in general.
It would be interesting to demonstrate Goodheart's law conclusively with real data in some domains.
An impoverished person in the US is rich compared to an impoverished person in India or Africa.
https://www.amazon.com/Factfulness-Reasons-World-Things-Bett...
There is a close connection with security, say screening at airports. If you fail to keep your screening criteria secret, the terrorists will simply ensure that they do not match the criteria. One way to thwart this is through randomness. There is a long public debate between Sam Harris and Bruce Schneier where the latter tried in vain to explain this to the former, who insisted that it was a waste of resources to search little old ladies. If one of your metrics is “don’t search little old ladies”, the terrorists will discover this through time by observation. The next bomb will be carried by a little old lady.
and here (58 comments): https://news.ycombinator.com/item?id=23762526
Also NPR's Planet Money (audio) also covered this interviewing Goodhart himself: https://www.npr.org/sections/money/2018/11/19/669395064/epis...
The most fun was challenging the audience - security researchers all - to think even more outside the box than usual for them.
I'm still (slowly) forging ahead on ideas spawned by this paper. Bringing the ideas of catching crooks to reality was not as straightforward as hoped. Then again, when has any project ever gone as planned?
This is an area where discipline remains essential, and maintaining discipline is a constant battle.
A dev manager running on only numbers will inevitably get empty, meaningless values such as tickets resolved or lines of code written, while the polar opposite manager will run on intuition alone. I imagine most would agree neither type is generally effective and a balance should be struck, and Goodhart's Law means you should be aware of what's important, pay attention to it, but do not make it your sole focus. And for God's sake, don't make a public dashboard for it.
The reason we use metrics is because things have scaled out of control, and using a "real" judgment system is no longer possible. Not for everyone, anyway.
Using hiring as an example, but this should work for nearly all metrics driven workloads. Hire a small subset of your staff using a real judgment system, hire most of your staff using metrics, then take a sample of those hired using metrics and take a real look at them compared against those hired using real judgments.
If they are reasonably close, the KPIs are working. If they are alien to each-other, you need to either stop using KPIs or alter them significantly to fit with what the more effective people are doing.
What KPIs do you use when the statistics are being used to measure whether the KPIs are the right ones?
https://web.eecs.utk.edu/~azh/blog/gamification.html
The Tyranny of Metrics is a good book that covers real-world cases of metrics gone wrong.
"Decline effect" could also be mostly due to the https://en.wikipedia.org/wiki/Replication_crisis
Goodhart's Law starts out as effective and the social system it purports to measure adapts (some might say 'distorts'), till the measure not longer serves its original purpose.
> See also:
> Campbell's law – "The more any quantitative social indicator is used for social decision-making, the more subject it will be to corruption pressures" https://en.wikipedia.org/wiki/Campbell%27s_law
> Cobra effect – when incentives designed to solve a problem end up rewarding people for making it worse https://en.wikipedia.org/wiki/Cobra_effect
> Gaming the system https://en.wikipedia.org/wiki/Gaming_the_system
> Lucas critique – it is naive to try to predict the effects of a change in economic policy entirely on the basis of relationships observed in historical data https://en.wikipedia.org/wiki/Lucas_critique
> McNamara fallacy – involves making a decision based solely on quantitative observations (or metrics) and ignoring all others https://en.wikipedia.org/wiki/McNamara_fallacy
> Overfitting https://en.wikipedia.org/wiki/Overfitting
> Reflexivity (social theory) https://en.wikipedia.org/wiki/Reflexivity_(social_theory)
> Reification (fallacy) https://en.wikipedia.org/wiki/Reification_(fallacy)
> San Francisco Declaration on Research Assessment – 2012 manifesto against using the journal impact factor to assess a scientist's work https://en.wikipedia.org/wiki/San_Francisco_Declaration_on_R...
> Volkswagen emissions scandal – 2010s diesel emissions scandal involving Volkswagen https://en.wikipedia.org/wiki/Volkswagen_emissions_scandal
Source: https://en.wikipedia.org/wiki/Goodhart%27s_law#See_also