The term, coined by the German economist Horst Siebert in his 2001 book, shows the negative consequences of poorly designed public policies.
The economy It is a science in constant evolution; Historical phenomena help governments and individuals develop techniques and strategies to improve the state of their economies.
In that line, there was a process that had been constantly repeated for a few decades and that led to a theory, called “Cobra effect”. Its creator, the German economist Horst SiebertI seek to give an explanation to the case of Cars ban in Mexico in 1989 and al Rewards system for delivering rat tails in Vietnam during the French colonial domain.
The origin of the “Cobra effect”, a story in New Dehli
Despite the recent cases, Siebert went back to An episode occurred in India when it was still considered “jewel of the British crown.” During that time, the capital, Nueva Dehli, suffered an invasion of poisonous cobras, so, in search of eliminating them, The government began offering a reward for each dead.
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The brilliant and intelligent idea had an immediate positive effect, and in a short time The number of cobras in the city was reduced. However, something strange began to happen over time: the cobras no longer resolved through the city, but They were raised by citizens to obtain their rewards once dead.
In an unusual practice of wrong incentives, the government decided to end the rewards system, which resulted in an increase in cobras in the city, even greater than at the beginning. The case served as Moraleja, to understand that you have to reflect on the pros and cons of government measures, to evaluate its design and avoid future problems.
Source: Ambito
