the Cobra Effect

Many economic principles are named after the the incidents that were corrected or supposed to be corrected… One of those is the cobra effect.
During British colonial rule of India, the British government was concerned about the number of venomous cobra snakes in Delhi. In order to decrease the snake population the government offered a bounty on cobra heads, hoping that people would kill all or most of the snakes which were plaguing the city. Initially this worked, but some witty residents saw this as a great way to supplement their income and started breeding snakes… when the government found out they abandoned the program causing the breeders to set free all of the cobras, which were now worthless. You can guess what happened? the cobra population was far greater after this initiative than before it. so the so called solution made the problem worse ;)

A similar thing happened in Hanoi, Vietnam, under French colonial rule. instead of cobras the french had a problem with the local rat population withing the sewer system… Instead of bringing the head to collect the bounty residents had to provide the government with the rat’s tail. Problem is the rat doesn’t die when it looses its head so… Plus people would release the rats without tails to let them procreate… Another great economic solution, which made the problem worse, because as you can guess also the Vietnamese figured that they could increase their revenue with breeding rats.

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