GOODHART'S LAW

The original form of Goodhart's law arose in economics. According to the 99th edition of Pears Cyclopaedia (1990--1, pp. G 27, G31), the law states that

`As soon as the government attempts to regulate any particular set of financial assets, these become unreliable as indicators of economic trends.'

This, of course, is because `financial institutions can... easily devise new types of financial assets.'

Professor Charles Goodhart FBA was Chief Adviser to the Bank of England. The Bank used to have a web page about him at www.bankofengland.co.uk/cvs/goodhart.htm, giving his own statement of the law, as published in his book Monetary Theory and Practice, page 96:

`Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes.'

Professor Marilyn Strathern FBA, following Hoskin (1996, see below), has re-stated Goodhart's Law more succinctly and more generally:

`When a measure becomes a target, it ceases to be a good measure.'

Goodhart's law is a sociological analogue of Heisenberg's uncertainty principle in quantum mechanics. Measuring a system usually disturbs it. The more precise the measurement, and the shorter its timescale, the greater the energy of the disturbance and the greater the unpredictability of the outcome.

See also the extended discussion by Keith Hoskin (1996) (The `awful idea of accountability': inscribing people into the measurement of objects), in R. Munro and J. Mouritsen (eds.), Accountability: Power, ethos and the technologies of managing, London, International Thomson Business Press, 265-282. Hoskin's article illustrates the wide applicability of Goodhart's law, and provides an illuminating historical discussion of what `accountability' has come to mean today. Strathern's discussion appears in her 1997 article `Improving Ratings': Audit in the British University System, European Review 5, 305-321.

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Michael McIntyre (mem at damtp.cam.ac.uk), DAMTP, University of Cambridge, Silver Street, Cambridge CB3 9EW