Definition

“When a measure becomes a target, it ceases to be a good measure.”

That’s Goodhart’s Law—a warning that once we start optimizing for a metric, we risk distorting the very thing we’re trying to improve.

It’s why your fitness tracker might make you obsess over steps instead of health. Why employees chase bonuses instead of impact. And why teaching to the test often kills real learning.

When we aim for the number, we often miss the point.

Why Use It

Understanding Goodhart’s Law transforms our approach to goal-setting and performance evaluation.

This framework helps explain why well-intentioned metrics often lead to unexpected and counterproductive behaviors, providing crucial insights for designing more effective measurement systems.

It is a powerful tool for anyone creating incentive structures or evaluation systems.

When to Use It

In boardrooms worldwide, executives question why their carefully crafted KPIs produced bizarre behaviors rather than desired outcomes. Goodhart’s Law explains precisely why.

When schools focus exclusively on standardized test scores, teachers inevitably “teach to the test” rather than cultivating deeper understanding. The measurement becomes the mission.

Product teams chasing user engagement metrics sometimes create addictive features that harm rather than help users. The numbers look great while the product’s actual value diminishes.

HR departments that evaluate employees primarily on quantifiable outputs often discover gaming behaviors that technically satisfy metrics while undermining organizational health.

What gets measured gets manipulated.

Policy makers implementing social programs find recipients optimizing for program eligibility rather than improving their circumstances. Measurement shapes behavior in predictable and surprising ways.

How to Use It

Andrew Niccol’s “Gattaca” offers a striking illustration of Goodhart’s Law in action. The film depicts a society where genetic metrics determine human worth, creating a rigid hierarchy that values measurable attributes over true potential.

Vincent Freeman’s journey demonstrates how such systems inevitably produce gaming behavior (his elaborate identity fraud) and missed opportunities (the organization nearly rejecting their most qualified candidate).

Like Vincent’s triumph over a flawed system, we can develop more nuanced approaches to measurement. The key isn’t abandoning metrics altogether, but creating measurement ecosystems that resist manipulation and capture what truly matters.

Here are three essential strategies:

1. Design holistic measurement systems: Create metrics that capture multiple dimensions of what you’re trying to improve. When measuring customer satisfaction, don’t just track Net Promoter Score, but also retention rates, support ticket resolution, and qualitative feedback. The combination provides a fuller picture than any single metric could offer.
2. Create balanced incentive structures: Ensure rewards don’t encourage gaming the system. Rather than compensating sales teams solely on closed deals, include customer satisfaction, account retention, and team collaboration. When people know they’re evaluated on multiple dimensions, they’re less likely to optimize for one at the expense of others.
3. Monitor and adapt continuously: Watch for warning signs that people are optimizing for the metric rather than the goal, and be willing to evolve your approach. If quarterly performance reviews lead to effort spikes followed by productivity crashes, consider more frequent, less formal check-ins. The best measurement systems evolve as your understanding deepens.

Next Steps

Implementing awareness of Goodhart’s Law requires strategic thinking and continuous monitoring. Think of it as developing a more sophisticated measurement ecosystem. Begin by auditing your current metrics and their effects. Notice where people might optimize for the measure rather than the intended outcome. Then, identify potential gaming behaviors that could undermine your goals.

Don’t be afraid to experiment with complementary measures. A balanced scorecard approach might better serve some objectives rather than single metrics. As you implement new systems, continuously monitor for unintended consequences. Through this process, remain flexible and willing to adjust your approach based on real-world outcomes.

Where it Came From

Charles Goodhart, a British economist, first articulated this principle in 1975 while discussing monetary policy at the Reserve Bank of Australia. Initially focused on economic indicators, the law has since been widely recognized as applicable to any field where human behavior responds to measurement. Marilyn Strathern later popularized a generalized version: “When a measure becomes a target, it ceases to be a good measure,” extending its relevance beyond economics to social policy, education, and organizational behavior.