Monday, September 9, 2019

Unintended consequences - the Cobra Effect

I was amused to read this article at the Foundation for Economic Education's web site.

In colonial India, Delhi suffered a proliferation of cobras, which was a problem very clearly in need of a solution given the sorts of things that cobras bring, like death. To cut the number of cobras slithering through the city, the local government placed a bounty on them. This seemed like a perfectly reasonable solution. The bounty was generous enough that many people took up cobra hunting, which led exactly to the desired outcome: The cobra population decreased. And that’s where things get interesting.

As the cobra population fell and it became harder to find cobras in the wild, people became rather entrepreneurial. They started raising cobras in their homes, which they would then kill to collect the bounty as before. This led to a new problem: Local authorities realized that there were very few cobras evident in the city, but they nonetheless were still paying the bounty to the same degree as before. City officials did a reasonable thing: They canceled the bounty. In response, the people raising cobras in their homes also did a reasonable thing: They released all of their now-valueless cobras back into the streets. Who wants a house full of cobras?

In the end, Delhi had a bigger cobra problem after the bounty ended than it had before it began. The unintended consequence of the cobra eradication plan was an increase in the number of cobras in the streets. This case has become the exemplar of when an attempt to solve a problem ends up exacerbating the very problem that rule-makers intended to fix.

. . .

Unintended consequences arise every time an authority imposes its will on people. Seat belt and airbag laws make it less safe to be a pedestrian or cyclist by making it safer for drivers to be less cautious. Payday lending laws, intended to protect low-income borrowers from high lending rates, make it more expensive for low-income borrowers to borrow by forcing them into even more expensive alternatives.

Requirements that corporations publicize how much they pay their CEOs in order to encourage stockholders to reduce CEO pay resulted in lesser-paid CEOs demanding more pay. Three-strikes laws, intended to reduce crime, increase police fatalities by giving two-time criminals a greater incentive to evade or even fight the police. The Americans With Disabilities Act gives employers an incentive to discriminate against the disabled by not hiring them in the first place so as to avoid potential ADA claims. Electrician licensing requirements can increase the incidence of injury due to faulty electrical work by reducing the supply of electricians, thereby encouraging homeowners to do their own electrical work.

There's more at the link.

I hadn't heard of the cobra example before, but the unintended consequences of well-intended laws, rules and regulations are legion.  I'd love to have some way of adding up all the costs of such unintended consequences throughout history, and seeing the size of the total.  I suspect it'd be astronomical!



C. S. P. Schofield said...

Seems to me the answer is, next cycle, to announce that the city will be goin door-to-door, paying for those cobras raised for the bounty in a one time deal before the bounty is canceled.

Glenda T Goode said...

I think a great parallel to the Cobra story is the concept of Welfare.

We pay people who are impoverished to improve their lives and hopefully get them back in the work force. We base our payments on how many are in the house hold.

Instead of seeking work, these adults all get busy creating more poor dependents thereby increasing their income as welfare recipients but doing nothing to reduce the fact that they do not work. They essentially breed Cobras in their homes, Cobras being children.

We could consider stopping welfare but the end result would be more poverty due to the larger population welfare is already supporting. This would be regarded as hard hearted and cruel even though the circumstances that these increased households arise from are the exact opposite of the desired result of Welfare.

Equating Welfare to an infestation of Cobras is not all that unrealistic as these people whose only skill is making more poor children have lots of time to get tattoos and buy cigarettes as well as trade their food stamps for drugs and the like. In the long run we are creating a criminal element by subsidizing this class of citizen who essentially lives due to the system and therefore cannot be eradicated without some sort of drastic action that would be terribly unpopular.

Jonathan H said...

I haven't heard of the cobra story, but I have heard similar ones elsewhere. In the middle ages, when the Catholics banned certain books, they bought up all the copies they could find and paid high prices for them - high enough prices that more copies would be printed just to be sold to them!
I heard a story, which you are likely more familiar with than I am, that part of the 1994 peace deal in South Africa was buying up weapons - but the offered prices offered were so high that it was worth smuggling more weapons in to get them!

Peter said...

@Jonathan H: Yes, that story about South Africa was true. Back in the early '90's, an AK-47 military assault rifle would cost you the equivalent of about $50 on the black market (literally) in the townships of Johannesburg, with a full magazine of ammo available for about $5. When the authorities decided to try to rein in the endemic violence of that period, they offered the equivalent of $100 or more for every such weapon handed in - which meant that smugglers rapidly began to ferry in more AK-47's from Zimbabwe and Mozambique, to profit from the price difference!

Some of the recovered weapons' serial numbers indicated that members of the armed forces of those countries were selling their issue weapons to the smugglers. Upon investigation, the soldiers concerned claimed that their guns had been handed in to their unit armory for "repair", and must have gone missing from there. Since the record books had conveniently been mislaid, nothing could be proved.

There were also rumors (soon to be proved correct) that the new majority government intended to crack down on legal gun ownership, revoking many licenses. As a result, when the South African Defense Force began shipping much of its older, obsolete equipment up to the Transvaal for long-term storage and/or disposal, an amazing number of assault rifles (FN/FAL derivatives, AK-47's, Israeli Galil's manufactured under license, Uzi submachine guns, handguns, hand-grenades, etc.) "fell off the backs of trucks" en route. I've no doubt they, and abundant ammunition supplies, are kept carefully hidden away, just in case the current turmoil in that country turns nasty.

Uncle Lar said...

Interestingly, Sarah Hoyt's blog today over at ATH is all about the unintended consequences of the green regulations forcing water and energy "saving" home appliances that in actual use wind up causing greater energy and water usage. Clothes and dish washers with reduced capacities that often require repeated cycles to get their contents clean, and those new flush toilets that use half as much water but require three flushes to get the job done as examples.

Sam L. said...

Ah, the revenge of the unintended, but eminently foreseeable, outcomes.

Thanks Uncle Lar, I'll go there next.

MadMcAl said...

That story reminds me of Terry Pratchett's Discworld.
Ankh Morpork had a similar problem with rats, and a bounty on rat tails.
Vetinaris solution?
Tax rat farms.

Will said...

Uncle Lar:
I'm hearing that one of the overlooked side effects of the reduced toilet water flush is a buildup inside the sewer lines of buildings, property, and city lines. The accretions are causing wide spread plumbing problems in San Fran, which is ground zero for this idiocy, IIRC.
Our plumbing systems were designed for a certain volume of flush, but when you get politicians and idiots(but I repeat myself) making engineering decisions, you are guaranteed to get poor results.

ErisGuy said...

May I assume FEE has uncontestable evidence for all these claims? Otherwise they’re just the usual economists’ “just so” stories.

For instance, have, in fact, two-time losers gone on police-killing sprees because they’re about to be arrested for felony car theft?
Or, if this claim is true, is the reduction in crime (did it happen) worth making policing a bit more dangerous?

I’d like to know what the evidence for “if cars are made safer, more pedestrians will be killed” is. How was that connection made? Could there have been any other cause, e.g., increased drug use, over the same period that might make drivers more careless?

Just because a law has an unintended consequence doesn’t mean the law should be revoked or that it was a mistaken in enacting it.

Kirk said...

Why assume when you can click the link and find out for yourself that they have citations for all their examples?

Mauser said...

Clearly the solution to bad drivers is to eliminate airbags, and instead install 12" spikes on the dashboard. At which point drivers will be MUCH more careful about what they run into.

OvergrownHobbit said...

A Christian nation (an internalized moral code: "The Law in Every Heart"). The free exchange of information and the freedom to do business with whoever you choose for whatever reason seems good to you (The 1st Amendment). The fair enforcement of contracts without deference to privilege (Rule of Law)

Accept no substitutes.