Perverse incentive  

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"A classic example of a perverse incentive occurred when the British government in India offered a bounty for dead cobras with intent to decrease the wild cobra population. However, enterprising people began to breed cobras for the income. When the government became aware of this, the reward program was scrapped, causing the cobra breeders to set the now-worthless snakes free. As a result, the wild cobra population further increased. The term cobra effect was coined to describe a situation where an attempted solution to a problem actually makes the problem worse."--Sholem Stein

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Kunstformen der Natur (1904) by Ernst Haeckel
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Kunstformen der Natur (1904) by Ernst Haeckel

A perverse incentive is an incentive that has an unintended and undesirable result which is contrary to the interests of the incentive makers. Perverse incentives are a type of unintended consequence.

Perverse agricultural subsidies

Although subsidies can be important, many are "perverse", in the sense of having adverse unintended consequences. To be "perverse", subsidies must exert effects that are demonstrably and significantly adverse both economically and environmentally. A subsidy rarely, if ever, starts perverse, but over time a legitimate efficacious subsidy can become perverse or illegitimate if it is not withdrawn after meeting its goal or as political goals change. Perverse subsidies are now so widespread that as of 2007 they amounted $2 trillion per year in the six most subsidised sectors alone (agriculture, fossil fuels, road transportation, water, fisheries and forestry).


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Unless indicated otherwise, the text in this article is either based on Wikipedia article "Perverse incentive" or another language Wikipedia page thereof used under the terms of the GNU Free Documentation License; or on original research by Jahsonic and friends. See Art and Popular Culture's copyright notice.

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