Goodhart’s Law: When targets quietly break the system
What this model means
Goodhart’s Law says: “When a measure becomes a target, it stops being a good measure.”
The moment you reward or punish people based on a number, they start optimizing the number itself, not the underlying reality it was supposed to represent.
Why it matters
We use numbers as shortcuts for messy things: “test scores = learning”, “GDP = prosperity”, “followers = influence”, “OKRs = progress”.
Goodhart’s Law is a reminder that every shortcut can backfire. Once people’s salaries, status, or survival depend on a metric, they’ll game it, tunnel-vision on it, or distort reality to please it. The system then starts optimizing for looking good on paper, not actually being good.
This shows up in government stats, corporate dashboards, school systems, sales quotas, even your own habit trackers.
Examples
1. Soviet nail factories (1970s)
Central planners in the Soviet Union set nail factory quotas by weight: hit X tons of nails and you’re a hero. Factories did the easiest possible thing— they made a small number of huge, heavy nails. On paper, production looked great. In reality, builders couldn’t get normal nails, and the “success” metric was actively sabotaging the thing it was supposed to improve. Read more in USSR Collapse case study.
2. Vietnam War body counts (1960s–1970s)
US military success was often tracked by “enemy killed”. Officers were rewarded for higher numbers. This pushed inflated counts, misclassified civilians, and operations chosen for easy kills rather than strategic value. The metric said “progress”; the war was being mismanaged.
3. Wells Fargo fake accounts scandal (2016)
US bank Wells Fargo pushed staff to hit aggressive cross-selling targets: more accounts per customer = success. Under pressure, employees opened millions of unauthorized accounts. Metrics looked amazing. Reality was fraud, fines, and a reputational disaster.
How to use it / common failure mode
When you see a metric, ask:
- What real thing is this trying to stand in for?
- How could someone hit this number while missing the point—or making things worse?
- What counter-metrics or guardrails are missing?
Failure mode: becoming a nihilist about metrics. The lesson isn’t “never measure.” It’s: treat metrics as clues, not gods, and keep checking whether the map still matches the territory.
In one line: Goodhart’s Law warns that once you start chasing a metric, you often lose the reality the metric was supposed to measure.
This article was produced with AI assistance and human editing.