The Cobra Effect (Ep. 96)
Our latest Freakonomics Radio podcast is called “The Cobra Effect.” (Download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript here.) The gist: when you want to get rid of a nasty pest, one obvious solution comes to mind: just offer a cash reward. But be careful — because nothing backfires quite like a bounty.
This is a story-filled episode that looks at the unintended consequences of trying to control everything from traffic to rodent populations to dangerous gases. If you’ve been hanging around these parts for a while, you will have noticed a similar theme in our “Misadventures in Baby-Making” podcast or the section of the film Freakonomics wherein Steve Levitt tries to potty-train his daughter.
The episode begins with Vikas Mehrotra, a finance professor at the University of Alberta, who is visiting Bogota, Colombia, and notices a strange traffic pattern. (You may remember Mehrotra from our “Church of Scionology” episode.) If you want to do some further reading on the story Mehrotra tells, check out “Rationing Can Backfire: The ‘Day Without a Car’ in Mexico City” (abstract; PDF) and “The Effect of Driving Restrictions on Air Quality in Mexico City” (abstract; PDF).
Mehrotra also introduces us to “the Cobra Effect,” a term popularized by the late German economist Horst Siebert:
MEHROTRA: So the “cobra effect” refers to a scheme in colonial India where the British governor, or whoever, the person in charge in Delhi, wanted to rid Delhi of cobras. Apparently in his opinion there were too many cobras in Delhi. So he had the bounty placed on cobras. And he expected this would solve the problem. But the population in Delhi, at least some of it, responded by farming cobras. And all of a sudden the administration was getting too many cobra skins. And they decided the scheme wasn’t as smart as initially it appeared and they rescinded the scheme. But by then the cobra farmers had this little population of cobras to deal with. And what do you do if there’s no market? You just release them. And so this significantly, by a few orders of magnitude, worsened the cobra menace in Delhi.
In a similar vein, you’ll hear the historian Michael Vann talk about his research, captured in “Of Rats, Rice, and Race: The Great Hanoi Rat Massacre, an Episode in French Colonial History” (abstract; PDF).
We also sent producer Katherine Wells on a hunting trip of sorts, down to Fort Benning in Georgia, where a surplus of feral pigs led to the introduction of, yes, a cash bounty. This captured the curiosity of Robert Holtfreter, who was then a Ph.D. candidate in wildlife sciences at Auburn. Here is Holtfreter’s PowerPoint assessment of the bounty program.
Later in the episode, we point out how a bounty designed to fight greenhouse gases backfired and how the Endangered Species Act sometimes ends up further endangering the species it was meant to protect (here‘s a paper on the topic, by John A. List, Michael Margolis, and Daniel E. Osgood).
And you’ll hear Steve Levitt taking the long view on the use of bounties or similar incentives:
LEVITT: Well I think you start by admitting to yourself that no individual, no government, is ever going to be as smart as the people who are scheming against you. So when you introduce an incentive scheme, you have to just admit to yourself that no matter how clever you think you are, there’s a pretty good chance that someone far more clever than yourself will figure out a way to beat the incentive scheme.