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{{Short description|Incentive that has a contrary result}}
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A '''perverse incentive''' is an [[incentive]] that has an unintended and undesirable result that is contrary to the intentions of its designers. The '''cobra effect''' is the most direct kind of perverse incentive, typically because the incentive unintentionally rewards people for making the issue worse.<ref name="brickman2">{{Cite book|last=Brickman|first=Leslie H.|url=https://books.google.com/books?id=R6ocCjZIrrUC|title=Preparing the 21st Century Church|year= 2002|isbn=978-1591601678|pages=326|publisher=Xulon Press }}</ref><ref name="siebert3">{{Cite book|last=Siebert|first=Horst|title=Der Kobra-Effekt. Wie man Irrwege der Wirtschaftspolitik vermeidet|publisher=Deutsche Verlags-Anstalt|year=2001|isbn=3421055629|location=Munich|language=de}}</ref> The term is used to illustrate how incorrect stimulation in [[Stimulus (economics)|economics]] and politics can cause [[unintended consequences]].
==
[[File:Indiancobra.jpg|right|thumb|240x240px|The [[Indian cobra]]]]
The term ''cobra effect'' was coined by economist [[Horst Siebert]] based on an [[anecdote|anecdotal]]
== Examples of perverse incentives ==
=== Pest control campaigns ===
* The [[Great Hanoi Rat Massacre]] occurred in 1902, in [[Hanoi]], [[Vietnam]] (then known as [[French Indochina]]), when, under French colonial rule, the colonial government created a bounty program that paid a reward for each [[rat]] killed.<ref name="freak2" /> To collect the bounty, people would need to provide the severed tail of a rat. Colonial officials, however, began noticing rats in Hanoi with no tails. The Vietnamese [[Rat-catcher|rat catchers]] would capture rats, sever their tails, then release them back into the sewers so that they could produce more rats.<ref>{{Cite journal|last=Vann|first=Michael G.|author-link=Michael G. Vann|year=2003|title=Of Rats, Rice, and Race: The Great Hanoi Rat Massacre, an Episode in French Colonial History|journal=French Colonial History|volume=4|pages=191–203|doi=10.1353/fch.2003.0027|s2cid=143028274}}</ref>
* In building the [[first transcontinental railroad]] in the 1860s, the [[United States Congress]] agreed to pay the builders per mile of track laid. As a result, [[Thomas C. Durant]] of [[Union Pacific Railroad]] lengthened a section of the route forming a bow shape unnecessarily adding miles of track.<ref>Mark Zwonitzer, writer, PBS American Experience documentary "Transcontinental Railroad" (2006) [https://www.pbs.org/wgbh/americanexperience/features/transcript/tcrr-transcript/ "Program Transcript . Transcontinental Railroad . WGBH American Experience"] {{Webarchive|url=https://web.archive.org/web/20170130153209/http://www.pbs.org/wgbh/americanexperience/features/transcript/tcrr-transcript/ |date=30 January 2017 }}</ref>▼
* Experiencing an issue with [[feral pig]]s, the [[United States Army|U.S. Army]] post of [[Fort Benning]] (now named Fort Moore) in [[Georgia (U.S. state)|Georgia]] offered hunters a $40-bounty for every pig tail turned in.<ref>{{cite news |title=Fort Benning puts a bounty on boars |url=https://www.nbcnews.com/id/wbna23416106 |work=NBC News |agency=Associated Press |date=1 March 2008 |language=en}}</ref> Over the course of the 2007–2008 program, the feral pig population in the area increased. While there were some reports that individuals purchased pigs' tails from meat processors<ref name=aphis>{{cite book |author1=((Animal and Plant Health Inspection Service)) |author1-link=Animal and Plant Health Inspection Service |title=Feral Swine Damage Management: A National Approach |id=Final Environmental Impact Statement |date=May 27, 2015 |publisher=United States Department of Agriculture, APHIS |page=78 |chapter-url=https://www.aphis.usda.gov/wildlife_damage/nepa/states/US/us-2015-fs-damage-mgt-a-national-approach-eis.pdf |archive-url=https://web.archive.org/web/20230520155519/https://www.aphis.usda.gov/wildlife_damage/nepa/states/US/us-2015-fs-damage-mgt-a-national-approach-eis.pdf |archive-date=20 May 2023 |chapter=Chapter 2: Alternatives; Section 2. Methods Dismissed |others=U.S. Department of the Interior Fish and Wildlife Service; U.S. Department of Agriculture Natural Resource Conservation Service}}</ref> then resold the tails to the Army at the higher bounty price, a detailed study of the bounty scheme found different effects from perverse incentives were mainly responsible. Both the pigs' fertility rate and offspring survival rates increased under the scheme. This was due to improved nutrition made available by the feed bait used to attract the animals to hunting sites. Secondly, hunters were found to be more likely to preferentially target large males as "trophy"-quality game, while ignoring females and juveniles as targets. Removal of mature males from the population has a negligible impact on population growth, as remaining mature males can each stud many breeding sows.<ref>{{cite journal |last1=Ditchkoff |first1=Stephen S. |last2=Holtfreter |first2=Robert W. |last3=Williams |first3=Brian L. |title=Effectiveness of a bounty program for reducing wild pig densities |journal=Wildlife Society Bulletin |date=September 2017 |volume=41 |issue=3 |pages=548–555 |doi=10.1002/wsb.787|doi-access=free |bibcode=2017WSBu...41..548D }}</ref>
* The 20th-century [[Paleontology|paleontologist]] [[Gustav Heinrich Ralph von Koenigswald|G. H. R. von Koenigswald]] used to pay [[Javanese people|Javanese]] locals for each fragment of [[Hominini|hominin]] skull that they produced. He later discovered that the people had been breaking up whole skulls into smaller pieces to maximize their payments.<ref>{{Cite book|last1=III|first1=Carl C. Swisher|url=https://books.google.com/books?id=gVWOJgM0azoC&q=pieces&pg=PA9|title=Java Man: How Two Geologists Changed Our Understanding of Human Evolution|last2=Curtis|first2=Garniss H.|last3=Lewin|first3=Roger|year=2001|publisher=University of Chicago Press|isbn=978-0226787343}}</ref>▼
* In 2002 British officials in Afghanistan offered Afghan poppy farmers $700 an acre in return for destroying their poppy crops. This ignited a poppy-growing frenzy among Afghan farmers who sought to plant as many poppies as they could in order to collect payouts from the cash-for-poppies program. Some farmers harvested the sap before destroying the plants, getting paid twice for the same crop.<ref>{{Cite book|url=https://books.google.com/books?id=FbYYEAAAQBAJ&q=editions:Wo0s0FwTubkC|title=The Afghanistan Papers: A Secret History of the War |page=136|isbn=978-1982159023 |last1=Whitlock |first1=Craig |year=2021 }} </ref>▼
=== Community safety and harm reduction ===
* [[Renewable Heat Incentive scandal]]{{snd}} (commonly referred to as the ''Cash for Ash'' scandal) Introduced by the [[Devolution|devolved]] government in [[Northern Ireland]], the [[Renewable Heat Incentive]] (RHI) was a 20-year scheme intended to encourage businesses to reduce energy usage and promote switching to [[Environmentally friendly|green]] sources. However, the subsidy for the renewable energy was greater than its cost, which allowed businesses to make a profit by switching to green sources and then increasing their energy use rather than reducing it. In some cases, an income was obtained simply by heating empty buildings. The political fall-out caused the [[Northern Ireland Executive]] to collapse in 2017. It was not re-convened until 2020.<ref>{{cite news|date=23 December 2016|title=RHI scandal: RHI 'cash for ash' scandal to cost NI taxpayers £490m|work=[[BBC News]]|url=https://www.bbc.com/news/uk-northern-ireland-38414486}}</ref><ref>{{cite news |date=16 January 2017 |title=Stormont crisis: Deadline passes for future of executive |work=BBC |publisher=BBC News |url=https://www.bbc.co.uk/news/uk-northern-ireland-38630403}}</ref>▼
▲* In 2002 British officials in [[Afghanistan]] offered Afghan [[poppy]] farmers $700 an acre in return for destroying their poppy crops. This ignited a poppy-growing frenzy among Afghan farmers who sought to plant as many poppies as they could in order to collect payouts from the cash-for-poppies program. Some farmers harvested the sap before destroying the plants, getting paid twice for the same crop.<ref>{{Cite book|url=https://books.google.com/books?id=FbYYEAAAQBAJ&q=editions:Wo0s0FwTubkC|title=The Afghanistan Papers: A Secret History of the War |page=136|isbn=978-1982159023 |last1=Whitlock |first1=Craig |year=2021 |publisher=Simon and Schuster }} </ref>
* [[Gun buyback]] programs are carried out by governments to reduce the number of guns in circulation, by purchasing firearms from citizens at a flat rate (and then destroying them). Some residents of areas with gun buyback programs have [[3D printing|3D printed]] large numbers of crude parts that met the minimum legal definition of a firearm, for the purpose of immediately turning them in for the cash payout.<ref>{{Cite web |last=Rose |first=Janus |date=August 2, 2022 |title=Someone Made $3,000 Selling 3D-Printed Guns at a Gun Buyback Event |url=https://www.vice.com/en/article/akee4e/someone-made-dollar3000-selling-3d-printed-guns-at-a-gun-buyback-event |url-status=live |archive-url=https://web.archive.org/web/20220802154455/https://www.vice.com/en/article/akee4e/someone-made-dollar3000-selling-3d-printed-guns-at-a-gun-buyback-event |archive-date=August 2, 2022 |website=Vice}}</ref><ref>{{Cite web |date=11 October 2022 |title=Participant used a 3D printer to make firearm parts in bulk that he then exchanged for gift cards |url=https://www.theguardian.com/us-news/2022/oct/11/new-york-gun-buyback-rules-3d-printed-parts |website=[[TheGuardian.com]] |publisher=Associated Press}}</ref>▼
* In 2005 the UN [[Intergovernmental Panel on Climate Change]] began an incentive scheme to cut down on greenhouse gases. Companies disposing of polluting gases were rewarded with [[carbon credits]], which could eventually get converted into cash. The program set prices according to how serious the damage the pollutant could do to the environment was and attributed one of the highest bounties for destroying [[HFC-23]], a byproduct of a common coolant, [[HCFC-22]]. As a result, companies began to produce more of this coolant in order to destroy more of the byproduct waste gas, and collect millions of dollars in credits.<ref>{{Cite web |title=The Cobra Effect |url=http://freakonomics.com/2012/10/11/the-cobra-effect-full-transcript/ |url-status=dead |archive-url=https://web.archive.org/web/20121018225311/http://freakonomics.com/2012/10/11/the-cobra-effect-full-transcript/ |archive-date=2023-01-13 |website=Freakonomics}}</ref> This increased production also caused the price of the refrigerant to decrease significantly, motivating refrigeration companies to continue using it, despite the adverse environmental effects.<ref>{{cite news|last1=Rosenthal|first1=Elisabeth|last2=Lehren|first2=Andrew W.|date=2012-08-08|title=Incentive to Slow Climate Change Drives Output of Harmful Gases|newspaper=The New York Times|url=https://www.nytimes.com/2012/08/09/world/asia/incentive-to-slow-climate-change-drives-output-of-harmful-gases.html|access-date=2015-07-02|issn=0362-4331}}</ref><ref>{{cite web|last=Gupta|first=Anika|title=Carbon credit scam slur on Indian firms|url=http://www.hindustantimes.com/newdelhi/carbon-credit-scam-slur-on-indian-firms/article1-599382.aspx|archive-url=https://web.archive.org/web/20150704055413/http://www.hindustantimes.com/newdelhi/carbon-credit-scam-slur-on-indian-firms/article1-599382.aspx|url-status=dead|archive-date=4 July 2015|access-date=2015-07-02|website=Hindustan Times}}</ref> In 2013, credits for the destruction of HFC-23 were suspended in the [[European Union]].<ref>{{cite web|date=23 November 2016|title=Commission adopts ban on the use of industrial gas credits|url=https://ec.europa.eu/clima/news/articles/news_2011060801_en|accessdate=3 November 2019|website=Climate Action |publisher=[[European Commission]]}}</ref>▼
* The FASTER Act of 2021 in the U.S. was intended to aid those with an allergy to [[sesame]] in avoiding the substance by ensuring foods
* Around 2010, online retailer [[Vitaly Borker]] found that customer posts elsewhere on the Internet about negative experiences with his eyeglass-sale website, DecorMyEyes, actually drove more traffic to it since the sheer volume of links pushed the site to the top of [[Google]] searches. He thus made a point of responding to customer complaints about the poor quality of the merchandise they received and/or misfilled orders rudely, with insults, threats of violence and other harassment.<ref>{{cite news | title=For DecorMyEyes, Bad publicity is a good thing | author=David Segal | work=New York Times | date= 2010-11-26 | url=https://www.nytimes.com/2010/11/28/business/28borker.html?_r=1&partner=rss&emc=rss&pagewanted=all}}</ref> Borker continued these practices under different names throughout the next decade despite serving two separate sentences in U.S. federal prison over charges arising from them.<ref>{{cite news|last=Segal|first=David|title=Has Online Retail's Biggest Bully Returned?|url=https://www.nytimes.com/2021/05/02/business/has-online-retails-biggest-bully-returned.html|newspaper=[[The New York Times]]|date=May 2, 2021|access-date=May 3, 2021}}</ref>▼
* In [[Alberta]], under the ''Child, Youth and Family Enhancement Act'', every person must report suspected [[child abuse]] to a director or police officer, and failure to do so is punishable by a $10,000 fine plus 6 months of imprisonment,<ref>{{Cite web |date=2023-04-01 |title=RSA 2000, c C-12 {{!}} Child, Youth and Family Enhancement Act |url=https://www.canlii.org/en/ab/laws/stat/rsa-2000-c-c-12/latest/rsa-2000-c-c-12.html |access-date=2024-03-14 |website=CanLII}}</ref> with the fine increased from $2,000 to $10,000 as a politician's response to a little girl who died of a catastrophic head injury after she was placed in kinship care.<ref>{{Cite news |last=Johnston |first=Janice |date=2019-10-30 |title=Serenity's Law receives royal assent |url=https://www.cbc.ca/news/canada/edmonton/serenity-law-bill-202-1.5340523 |access-date=2024-03-14 |work=Canada Broadcasting Corporation}}</ref> However, according to criminal law professor Narayan, enforcing it would cause people to overreport, which wastes resources, and it would also create a [[chilling effect]] that prevents people from reporting child abuse observed over a period of time, as that would incriminate them for failing to report earlier.<ref>{{Cite news |last=Graveland |first=Bill |date=2017-10-01 |title=Alberta urged to enforce law on child abuse reporting |url=https://www.cbc.ca/news/canada/calgary/child-abuse-alberta-law-reporting-1.4315632 |access-date=2024-03-14 |work=Canadian Broadcasting Corporation}}</ref> There is a similar law in other Canadian provinces.<ref>{{Cite web |last=Rimer |date=2019-04-10 |title=INFORMATION SHEET #7 SUMMARY OF LEGAL REQUIREMENTS FOR REPORTING SUSPICIONS OF CHILD ABUSE |url=https://boostforkids.org/wp-content/uploads/2019/04/Summary-of-Legal-Requirements-for-Reporting-Suspicions-of-Child-Abuse_All.pdf |access-date=2024-03-14}}</ref>
* In the 2000s, Canada negotiated a "[[Canada–United States Safe Third Country Agreement|Safe Third Country Agreement]]" with the U.S. under which applicants for [[Right of asylum|political asylum]] could only apply in the first of the two countries they reached, in order to discourage [[asylum shopping]]. Among the provisions was one that denied anyone entering Canada at an official [[port of entry]] from requesting asylum there, in theory limiting asylum applications to either those filed by refugees in camps abroad or those who could legally travel to Canada and do so at an immigration office. In the late 2010s, [[Illegal immigration to Canada|some migrants began entering Canada irregularly]], between official border crossings, at places like [[Roxham Road]] between New York and Quebec, since once they were in Canada, they were allowed to file applications with the full range of appeals available to them, a process that could take years. Canada wound up processing thousands more applications for asylum than it had planned to.<ref name="Keller Atlantic article">{{cite news|last=Keller|first=Tony|title=Canada Has Its Own Ways of Keeping Out Unwanted Immigrants|url=https://www.theatlantic.com/ideas/archive/2018/07/canada-immigration-success/564944/|newspaper=[[The Atlantic]]|date=July 12, 2018|access-date=June 30, 2021}}</ref>▼
* Hacktoberfest is an October-long celebration to promote contributions to the [[free and open-source software]] communities. In 2020, participants were encouraged to submit four or more [[pull request]]s to any public [[Free software|free]] or [[Open-source software|open-source]] (FOS) repository, with a free "Hacktoberfest 2020" T-shirt for the first 75,000 participants to do so.<ref>{{Cite web|date=25 September 2020|title=Hacktoberfest 2020|url=https://laravel-news.com/hacktoberfest-2020|access-date=31 January 2021|website=Laravel News}}</ref> The free T-shirts caused thousands of frivolous pull requests on FOS projects.<ref name=":22">{{Cite web|last=Portfolio|first=Hwee's|title=#Shitoberfest: How free T-shirts ruined #Hacktoberfest2020|url=https://ongchinhwee.me/shitoberfest-ruin-hacktoberfest/|access-date=31 January 2021|website=ongchinhwee.me}}</ref> A large volume of pull requests made by users amounted to counterproductive changes to code, including: changing project names from "My Project" to "My Awesome Project"; changing bullet points to dashes; and in some cases, even breaking working code.{{Citation needed|date=January 2023}}▼
===Environmental and wildlife protection===
* The United States [[Endangered Species Act of 1973]] imposes development restrictions on landowners who find [[endangered species]] on their property.<ref name=":12">Langpap, Christian, and JunJie Wu. 2017. "Thresholds, Perverse Incentives, and Preemptive Conservation of Endangered Species" ''Journal of the Association of Environmental and Resource Economists'' 4(S1):S227–S259. {{doi|10.1086/692070}}.</ref> While this policy has some positive effects for wildlife, it also encourages preemptive [[habitat destruction]] ([[Swamp draining|draining swamps]] or cutting down trees that might host valuable species) by landowners who fear losing the lucrative development-friendliness of their land because of the presence of an endangered species.<ref>Stephen Dubner and Steven Levitt, [https://www.nytimes.com/2008/01/20/magazine/20wwln-freak-t.html?pagewanted=2&_r=1&sq=unintended%20consequences&st=cse&scp=1 ''Unintended Consequences''], New York Times Magazine, 20 January 2008</ref> In some cases, endangered species may even be [[Shooting, shoveling, and shutting up|deliberately killed]] to avoid discovery.<ref name=":12" /> This same perverse incentive has also been observed in other countries, including Canada and various European countries.
▲* In 2005 the UN [[Intergovernmental Panel on Climate Change]] began an incentive scheme to cut down on greenhouse gases. Companies disposing of polluting gases were rewarded with [[carbon credits]], which could eventually get converted into cash. The program set prices according to how serious the damage the pollutant could do to the environment was and attributed one of the highest bounties for destroying [[HFC-23]], a byproduct of a common
* Funding [[fire department]]s by the number of fire calls that are made is intended to reward fire departments that do the most work. However, it may discourage them from [[Fire prevention|fire-prevention]] activities, leading to an increase in actual fires.<ref>Department for Communities and Local Government (2002). [http://www.local.dtlr.gov.uk/review/consult/fire.pdf "Fire"] {{webarchive|url=https://web.archive.org/web/20040801032503/http://www.local.dtlr.gov.uk/review/consult/fire.pdf|date=2004-08-01}}. In ''Consultation on the Local Government Finance Formula Grant Distribution''. Retrieved November 10, 2006.</ref>▼
▲* [[Renewable Heat Incentive scandal]]{{snd}} (commonly referred to as the ''Cash for Ash'' scandal) Introduced by the [[Devolution|devolved]] government in [[Northern Ireland]], the [[Renewable Heat Incentive]] (RHI) was a 20-year scheme intended to encourage businesses to reduce energy usage and promote switching to [[Environmentally friendly|green]] sources. However, the subsidy for the renewable energy was greater than its cost, which allowed businesses to make a profit by switching to green sources and then increasing their energy use rather than reducing it. In some cases, an income was obtained simply by heating empty buildings. The political fall-out caused the [[Northern Ireland Executive]] to collapse in 2017. It was not re-convened until 2020.<ref>{{cite news|date=23 December 2016|title=RHI scandal: RHI 'cash for ash' scandal to cost NI taxpayers £490m|work=[[BBC News]]|url=https://www.bbc.com/news/uk-northern-ireland-38414486}}</ref><ref>{{cite news |date=16 January 2017 |title=Stormont crisis: Deadline passes for future of executive |work=BBC |publisher=BBC News |url=https://www.bbc.co.uk/news/uk-northern-ireland-38630403}}</ref>
=== Historic preservation schemes ===
As an incentive to preserve historical buildings, governments may designate older structures as historical properties; such classification may prevent or impede further sale or alteration of the property. Any compensation offered may be significantly less than normal commercial returns on properties or land.{{cn|date=May 2023}}
Examples related to this type of perverse incentive include:
* The United Kingdom's [[listed building]] regulations are intended to protect historically important buildings by requiring owners to seek permission before making changes to buildings that have been listed. In 2017, the owners of an unlisted historic building in Bristol destroyed a 400-year-old ceiling the day before a scheduled visit by listings officers, allegedly to prevent the building from being listed, which could have limited future development.<ref>{{cite news|url=https://www.bbc.co.uk/news/uk-england-bristol-41109143|title=Bristol Jacobean ceiling 'destroyed before listings visit'|date=1 September 2017|work=BBC News}}</ref><ref>{{cite news|title=Press release: Developer mutilates Jacobean ceiling to avoid potential listing|url=https://www.savebritainsheritage.org/campaigns/item/459/Press-release-Developer-mutilates-Jacobean-ceiling-to-avoid-potential-listing|date=31 August 2017|work=Save Britain's Heritage}}</ref>▼
*
=== Healthcare cost control ===
* Paying [[Health professional|medical professionals]] and reimbursing insured patients for treatment but not prevention encourages medical conditions to be ignored until treatment is required.<ref>James C. Robinson, Reinvention of Health Insurance in the Consumer Era (2004). In ''[[Journal of the American Medical Association|JAMA]], April 21, 2004; 291: 1880–1886''. Retrieved 2008-01-12</ref> Moreover, paying only for treatment effectively discourages prevention (which would improve quality of life for the patient but would also reduce the demand for future treatments). Payment for treatment also generates a perverse incentive for unnecessary treatments that could be harmful{{snd}}for example, in the form of side effects of drugs and surgery. These side effects themselves can then trigger a demand for further treatments.
* Under the [[Medicare (United States)|American Medicare]] program, doctors are reimbursed at a higher rate if they administer more expensive medications to treat a condition. This creates an incentive for the physician to prescribe a more expensive drug when a less expensive one might do.<ref>{{Cite news|last=Sanger-katz|first=Margot|date=2016-03-10|title=Medicare Tries an Experiment to Fight Perverse Incentives|newspaper=The New York Times|url=https://www.nytimes.com/2016/03/10/upshot/medicare-tries-an-experiment-to-fight-perverse-incentives.html|access-date=2016-07-30|issn=0362-4331}}</ref>
* The "[[welfare trap]]" theory describes perverse incentives that occur when money earned through [[Part-time job|part-time]] or [[Minimum wage|minimum-wage]] employment results in a reduction in [[state benefit]]s that would have been greater than the amount earned, thereby creating a barrier to low-income workers re-entering the workforce.<ref>{{Cite web |date=1997-01-06 |title=Gassing up the welfare trap machine - |url=https://www.aims.ca/op-ed/gassing-up-the-welfare-trap-machine/ |access-date=2023-01-13 |website=Atlantic Institute for Market Studies |language=en-US}}</ref> According to this theory, underlying factors include a full [[tax exemption]] for public assistance while employment income is taxed; a pattern of [[welfare]] paying more per dependent child (while employers are prohibited from discriminating in this manner, and their workers often must purchase daycare); or loss of welfare eligibility for the [[working poor]] ending other [[means-tested benefit]]s (public medical, dental, or prescription drug plans; [[Subsidized housing|subsidised housing]]; [[legal aid]]), which are expensive to replace at full market rates. If the withdrawal of means-tested benefits that comes with entering low-paid work causes there to be no significant increase in total income or even a net loss, then this gives a powerful disincentive to take on such work.<ref>{{Cite web|last=Baetjer|first=Howard|date=August 24, 2016|title=The Welfare Cliff and Why Many Low-Income Workers Will Never Overcome Poverty|url=https://www.learnliberty.org/blog/the-welfare-cliff-and-why-many-low-income-workers-will-never-overcome-poverty/|website=Learn Liberty}}</ref> The welfare trap theory's accuracy is disputed, and some studies have shown the poor individuals who are given money tend to spend it on necessities, and continue working.<ref>{{cite web |last1=Treisman |first1=Rachel |title=California Program Giving $500 No-Strings-Attached Stipends Pays Off, Study Finds |url=https://www.npr.org/2021/03/04/973653719/california-program-giving-500-no-strings-attached-stipends-pays-off-study-finds |website=NPR|date=4 March 2021 }}</ref><ref>{{cite web |last1=Allas |first1=Tera |last2=Maksimainen |first2=Jukka |last3=Manyika |first3=James |last4=Singh |first4=Navjot | url=https://www.mckinsey.com/industries/public-and-social-sector/our-insights/an-experiment-to-inform-universal-income|title=An experiment to inform universal basic income |website=McKinsey and Company}}</ref><ref>{{cite web |last1=Konish |first1=Lorie |title=Personal Finance: How one universal basic income experiment is helping the homeless get off the streets |url=https://www.cnbc.com/2021/08/21/how-one-universal-basic-income-experiment-is-helping-the-homeless.html |website=CNBC|date=21 August 2021 }}</ref><ref>{{cite web |last1=Cox |first1=David |title=Canada's forgotten universal basic income experiment |url=https://www.bbc.com/worklife/article/20200624-canadas-forgotten-universal-basic-income-experiment |website=BBC |access-date=December 29, 2021}}</ref>▼
=== Humanitarian and welfare policies ===
▲* The United Kingdom's [[listed building]] regulations are intended to protect historically important buildings by requiring owners to seek permission before making changes to buildings that have been listed. In 2017, the owners of an unlisted historic building in Bristol destroyed a 400-year-old ceiling the day before a scheduled visit by listings officers, allegedly to prevent the building from being listed, which could have limited future development.<ref>{{cite news|url=https://www.bbc.co.uk/news/uk-england-bristol-41109143|title=Bristol Jacobean ceiling 'destroyed before listings visit'|date=1 September 2017|work=BBC News}}</ref><ref>{{cite news|title=Press release: Developer mutilates Jacobean ceiling to avoid potential listing|url=https://www.savebritainsheritage.org/campaigns/item/459/Press-release-Developer-mutilates-Jacobean-ceiling-to-avoid-potential-listing|date=31 August 2017|work=Save Britain's Heritage}}</ref>
▲* In the 2000s, Canada negotiated a "[[Canada–United States Safe Third Country Agreement|Safe Third Country Agreement]]" with the U.S. under which applicants for [[Right of asylum|political asylum]] could only apply in the first of the two countries they reached, in order to discourage [[asylum shopping]]. Among the provisions was one that denied anyone entering Canada at an official [[port of entry]] from requesting asylum there, in theory limiting asylum applications to either those filed by refugees in camps abroad or those who could legally travel to Canada and do so at an immigration office. In the late 2010s, [[Illegal immigration to Canada|some migrants began entering Canada irregularly]], between official border crossings, at places like [[Roxham Road]] between New York and Quebec, since once they were in Canada, they were allowed to file applications with the full range of appeals available to them, a process that could take years. Canada wound up processing thousands more applications for asylum than it had planned to.<ref name="Keller Atlantic article">{{cite news|last=Keller|first=Tony|title=Canada Has Its Own Ways of Keeping Out Unwanted Immigrants|url=https://www.theatlantic.com/ideas/archive/2018/07/canada-immigration-success/564944/|newspaper=[[The Atlantic]]|date=July 12, 2018|access-date=June 30, 2021}}</ref>
▲*[[Gun buyback]] programs are carried out by governments to reduce the number of guns in circulation, by purchasing firearms from citizens at a flat rate (and then destroying them). Some residents of areas with gun buyback programs have [[3D printing|3D printed]] large numbers of crude parts that met the minimum legal definition of a firearm, for the purpose of immediately turning them in for the cash payout.<ref>{{Cite web |last=Rose |first=Janus |date=August 2, 2022 |title=Someone Made $3,000 Selling 3D-Printed Guns at a Gun Buyback Event |url=https://www.vice.com/en/article/akee4e/someone-made-dollar3000-selling-3d-printed-guns-at-a-gun-buyback-event |url-status=live |archive-url=https://web.archive.org/web/20220802154455/https://www.vice.com/en/article/akee4e/someone-made-dollar3000-selling-3d-printed-guns-at-a-gun-buyback-event |archive-date=August 2, 2022 |website=Vice}}</ref><ref>{{Cite web |date=11 October 2022 |title=Participant used a 3D printer to make firearm parts in bulk that he then exchanged for gift cards |url=https://www.theguardian.com/us-news/2022/oct/11/new-york-gun-buyback-rules-3d-printed-parts |website=[[TheGuardian.com]] |publisher=Associated Press}}</ref>
▲* The "[[welfare trap]]" theory describes perverse incentives that occur when money earned through [[Part-time job|part-time]] or [[Minimum wage|minimum-wage]] employment results in a reduction in [[state benefit]]s that would have been greater than the amount earned, thereby creating a barrier to low-income workers re-entering the workforce.<ref>{{Cite web |date=1997-01-06 |title=Gassing up the welfare trap machine - |url=https://www.aims.ca/op-ed/gassing-up-the-welfare-trap-machine/ |access-date=2023-01-13 |website=Atlantic Institute for Market Studies |language=en-US}}</ref> According to this theory, underlying factors include a full [[tax exemption]] for public assistance while employment income is taxed; a pattern of [[welfare]] paying more per dependent child (while employers are prohibited from discriminating in this manner, and their workers often must purchase daycare); or loss of welfare eligibility for the [[working poor]] ending other [[means-tested benefit]]s (public medical, dental, or prescription drug plans; [[Subsidized housing|subsidised housing]]; [[legal aid]]), which are expensive to replace at full market rates. If the withdrawal of means-tested benefits that comes with entering low-paid work causes there to be no significant increase in total income or even a net loss, then this gives a powerful disincentive to take on such work.<ref>{{Cite web|last=Baetjer|first=Howard|date=August 24, 2016|title=The Welfare Cliff and Why Many Low-Income Workers Will Never Overcome Poverty|url=https://www.learnliberty.org/blog/the-welfare-cliff-and-why-many-low-income-workers-will-never-overcome-poverty/|website=Learn Liberty
▲* As an incentive to preserve historical homes, government started program to designate old homes as historical properties, which prevents further sales or alteration of the property. However, in many cases, the offered compensation was significantly less than fair market price of the property and/or land. In the months after, incidence of fire increased in the districts that rolled out this program, resulting in more destruction of historical homes.<ref>{{Cite news |last=Newcomb |first=Amelia A. |date=May 21, 1982 |title=Historic buildings prove special target for arson |work=Christian Science Monitor |url=https://www.csmonitor.com/1982/0521/052135.html |access-date=2023-01-13 |issn=0882-7729}}</ref>
▲* The FASTER Act of 2021 in the U.S. was intended to aid those with an allergy to sesame in avoiding the substance by ensuring foods which contain it are labelled, however the stringent requirements around preventing cross-contamination made it simpler and less expensive for many companies to instead add sesame to their products and label it as an ingredient, decreasing the number of sesame-free products available and creating the risk of an allergic reaction occurring from previously safe foods.<ref>{{Cite web |last=Aleccia |first=Jonel |date=December 21, 2022 |title=New label law has unintended effect: Sesame in more foods |url=https://apnews.com/article/sesame-allergies-label-b28f8eb3dc846f2a19d87b03440848f1 |website=[[Associated Press]]}}</ref>
===Promotional schemes and public relations ===
▲* Hacktoberfest is an October-long celebration to promote contributions to the [[free and open-source software]] communities. In 2020, participants were encouraged to submit four or more [[pull request]]s to
▲* Around 2010, online retailer [[Vitaly Borker]] found that customer posts elsewhere on the Internet about negative experiences with his eyeglass-sale website, DecorMyEyes, actually drove more traffic to it since the sheer volume of links pushed the site to the top of [[Google]] searches. He thus made a point of responding to customer complaints about the poor quality of the merchandise they received and/or misfilled orders rudely, with insults, threats of violence and other harassment.<ref>{{cite news | title=For DecorMyEyes, Bad publicity is a good thing | author=David Segal | work=New York Times | date= 2010-11-26 | url=https://www.nytimes.com/2010/11/28/business/28borker.html?_r=1&partner=rss&emc=rss&pagewanted=all}}</ref> Borker continued these practices under different names throughout the next decade despite serving two separate sentences in U.S. federal prison over charges arising from them.<ref>{{cite news|last=Segal|first=David|title=Has Online Retail's Biggest Bully Returned?|url=https://www.nytimes.com/2021/05/02/business/has-online-retails-biggest-bully-returned.html|newspaper=[[The New York Times]]|date=May 2, 2021|access-date=May 3, 2021}}</ref>
=== Returns for effort ===
▲* The 20th-century [[Paleontology|paleontologist]] [[Gustav Heinrich Ralph von Koenigswald|G. H. R. von Koenigswald]] used to pay [[Javanese people|Javanese]] locals for each fragment of [[Hominini|hominin]] skull that they produced. He later discovered that the people had been breaking up whole skulls into smaller pieces to maximize their payments.<ref>{{Cite book|last1=III|first1=Carl C. Swisher|url=https://books.google.com/books?id=gVWOJgM0azoC&q=pieces&pg=PA9|title=Java Man: How Two Geologists Changed Our Understanding of Human Evolution|last2=Curtis|first2=Garniss H.|last3=Lewin|first3=Roger|year=2001|publisher=University of Chicago Press|isbn=978-0226787343}}</ref>
▲* In building the [[first transcontinental railroad]] in the 1860s, the [[United States Congress]] agreed to pay the builders per mile of track laid. As a result, [[Thomas C. Durant]] of [[Union Pacific Railroad]] lengthened a section of the route, forming a bow shape and unnecessarily adding miles of track.<ref>Mark Zwonitzer, writer, PBS American Experience documentary "Transcontinental Railroad" (2006) [https://www.pbs.org/wgbh/americanexperience/features/transcript/tcrr-transcript/ "Program Transcript . Transcontinental Railroad . WGBH American Experience"] {{Webarchive|url=https://web.archive.org/web/20170130153209/http://www.pbs.org/wgbh/americanexperience/features/transcript/tcrr-transcript/ |date=30 January 2017 }}</ref>
▲* Funding [[fire department]]s by the number of fire calls that are made is intended to reward fire departments that do the most work. However, it may discourage them from [[Fire prevention|fire-prevention]] activities, leading to an increase in actual fires.<ref>Department for Communities and Local Government (2002). [http://www.local.dtlr.gov.uk/review/consult/fire.pdf "Fire"] {{webarchive|url=https://web.archive.org/web/20040801032503/http://www.local.dtlr.gov.uk/review/consult/fire.pdf|date=2004-08-01}}. In ''Consultation on the Local Government Finance Formula Grant Distribution''. Retrieved November 10, 2006.</ref>
== In literature ==
In [[Autobiography of Mark Twain|his autobiography]], Mark Twain says that his wife, Olivia Langdon Clemens, had a similar experience:<ref>{{citation |pages=151–152 |title=Mark Twain's Own Autobiography: The Chapters from the North American Review |author=Mark Twain |author-link=Mark Twain |editor=Michael J. Kiskis |publisher=University of Wisconsin Press |year=2010 |isbn=978-0299234737}}</ref>{{quote|Once in Hartford the flies were so numerous for a time, and so troublesome, that Mrs. Clemens conceived the idea of paying George a bounty on all the flies he might kill. The children saw an opportunity here for the acquisition of sudden wealth. ... Any Government could have told her that the best way to increase wolves in America, rabbits in Australia, and snakes in India, is to pay a bounty on their scalps. Then every patriot goes to raising them.}}
== See also ==
*
▲* [[Instrumental convergence]]
▲* [[Moral hazard]]
* {{anl|Streisand effect}}
▲* [[Social trap]]
▲* [[Tragedy of the commons]]
== References ==
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==Further reading==
* Chiacchia, Ken (2017 July 12). "[https://www.hpcwire.com/2017/07/12/perverse-incentives-economics-mis-shaped-academic-science/ Perverse Incentives? How Economics (Mis-)shaped Academic Science]." ''HPC Wire''.
* {{Cite web |last=Hartley |first=Dale |date=October 8, 2016 |title=The Cobra Effect: Good Intentions, Perverse Outcomes |url=https://www.psychologytoday.com/blog/machiavellians-gulling-the-rubes/201610/the-cobra-effect-good-intentions-perverse-outcomes |website=Psychology Today |language=en-CA}}
* Myers, Norman, and Jennifer Kent (1998). ''Perverse Subsidies{{snd}}Tax $ Undercutting our Economies and Environments Alike''. Winnipeg, Manitoba: International Institute for Sustainable Development.
* Rothschild, Daniel M., and Emily Hamilton [2010] (2020). "Perverse Incentives of Economic 'Stimulus'," ''Mercatus on Policy Series'' 66. {{SSRN|3561693}}; {{doi|10.2139/ssrn.3561693}}.
* Schuyt, Kirsten (2005). "Perverse Policy Incentives." pp. 78–83 in ''Forest Restoration in Landscapes'', edited by S. Mansourian, Daniel Vallauri, and N. Dudley. New York: Springer. {{doi|10.1007/0-387-29112-1_11}}.
* Sizer, N. (2000). ''Perverse Habits, the G8 and Subsidies the Harm Forests and Economies''. Washington, DC: [[World Resources Institute]].
* {{Cite journal|last1=
* Stephan, Paula (2012). "[https://www.nature.com/articles/484029a.pdf Perverse incentives]." ''Nature'' '''484
* "[https://www.cgdev.org/blog/perverse-incentives-south-african-aids-patients Perverse Incentives for South African AIDS Patients]." [[Center for Global Development]] (
* {{cite news |last1=Phillips |first1=Michael M. |title=In South Africa, Poor AIDS Patients Adopt Risky Ploy |url=https://www.wsj.com/articles/SB114437285980719599 |work=Wall Street Journal |date=7 April 2006 |archive-url=https://web.archive.org/web/20220117021255/https://www.wsj.com/articles/SB114437285980719599 |archive-date=17 January 2022}}
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