The Cobra Effect: Why Good Intentions Don't Solve Problems

This article was prompted by an exchange I had with Elon Musk on X, in which he pointed out that giving more money to homelessness charities in California does not seem to reduce the number of homeless people. In response, I reminded him about the Cobra Effect and was surprised to discover how many people hadn’t heard of it.

The Cobra Effect is based on a story which may or may not have taken place during British colonial rule in India. Despite its unconfirmed authenticity, it remains a powerful illustration of how bad incentives can undermine good intentions. In my view, it should be taught as early as possible to anyone who intends to run, manage or operate any system of almost any complexity.

The story goes something like this:

In colonial India, under British rule, the city of Delhi had a problem with cobras. To control the cobra population, the government offered a bounty for every dead cobra. Huge numbers of dead cobras were handed in, but the cobra problem got worse, not better. 

Why? 

Because people realised they could profit from this bounty not by killing cobras in the wild, but by breeding cobras–raising and killing them specifically for the reward. This led to  small-scale cobra farming operations. When the government became aware of this practice, they discontinued the bounty program. Without the incentive, the cobra breeders released their now-worthless snakes into the wild. As a result, the cobra population in Delhi ended up increasing rather than decreasing, exacerbated by the government's own policy.

The reason this story resonates is that it reflects something we all know: intentions don’t drive human behaviour. Incentives do.

A good recent example might be Mexico City's "Hoy No Circula" programme, intended to reduce pollution by banning cars from the road one day a week based on their licence plate numbers. This policy led to an increase in car ownership. Why? Because people bought additional cars with different plate numbers to bypass the restriction, thus increasing pollution.

You will no doubt be aware that over the last decade there has been a powerful societal push to improve relations between different racial, ethnic and other groups. Yet, oddly, tensions between these various groups do not appear to be declining. On the contrary, men and women, for example, are increasingly positioned as enemies by man-hating feminists on the one hand, and misogynistic incels and people like Andrew Tate on the other. The same is true of race relations, where our societies have moved in a matter of years from imperfect colour-blindness to an obsession with skin colour and ethnic background.

How has this happened?