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255

The Cobra Effect

Apr 19, 2022
How Stuff Works
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22
minutes

What do snakes in Delhi, cars in Bogotá and pigs in Georgia all have in common?

In this episode, we'll learn how incentives don't always result in their intended consequences...

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[00:00:00] Hello, hello hello, and welcome to English Learning for Curious Minds, by Leonardo English. 

[00:00:12] The show where you can listen to fascinating stories, and learn weird and wonderful things about the world at the same time as improving your English.

[00:00:22] I'm Alastair Budge, and today we are going to be talking about something called The Cobra Effect.

[00:00:30] It’s what happens when good intentions lead to unexpected, negative consequences. 

[00:00:37] It’s a story of human psychology, of people outwitting, outsmarting, governments and policymakers, a story of human ingenuity, and provides a lesson to us all of what happens when we don’t think through the possible consequences of our actions.

[00:00:57] In today’s episode we’ll come across snakes, rats, cars, heroin, railways and rubbish. We’ll travel from Britain to India, Vietnam to the United States, but there will be one unifying factor throughout: human beings.

[00:01:15] From Bogota to Bangkok, Kabul to Calcutta, people are people, and as we’ll soon find out, people are excellent at finding opportunities when they arise.

[00:01:28] So, let’s get right into it.

[00:01:31] In life, there are broadly two ways of getting anyone to do what you want. 

[00:01:37] Whether we are talking about persuading a 2-year-old child to brush his teeth or getting the population of an entire country to pay their taxes, you can either incentivise them to do it, or punish them if they don’t do it.

[00:01:53] You might give your 2-year-old child a star for brushing his teeth or tell him he isn’t allowed to play with his toys if he doesn’t brush his teeth.

[00:02:04] In our national “paying your taxes” scenario, a country might remind citizens of their civic duty to pay their taxes, or offer some reward for paying them on time, or it might send its citizens to jail, or fine them money, if they don’t pay their taxes.

[00:02:25] Of course, this is a gross simplification, but as someone trying to get someone else to do something, you have two broad categories of options: the carrot, and the stick.

[00:02:38] And so it was in British India, in Delhi to be precise, that the British were presented with a problem.

[00:02:47] In a story recalled by the German economist Horst Siebert, the British government was concerned with the amount of cobras, poisonous deadly snakes, slithering around the streets of Delhi.

[00:03:02] You couldn’t exactly ask the snakes politely to leave, or punish them for being in the city. The government could have surely hired people to go around either killing the snakes or pushing them away from the city, but it tried to do something different.

[00:03:20] It thought, well, if we offer a reward to local people for killing cobras, people will have a reason to kill them, the population will reduce, and our problem will be solved.

[00:03:33] So, it was widely published that the British would pay for any skin of a cobra.

[00:03:40] Initially it was a great success. People started hunting cobras, killing them and bringing in their skins for a reward.

[00:03:50] The cobra population started to go down, but then there was a constant and indeed ever-increasing number of cobra skins appearing at government offices, and there didn’t seem to be any real decrease, any real reduction, in the number of cobras roaming the streets.

[00:04:11] How was it possible that there were so many dead cobras being brought to government offices, yet so many still roaming the streets?

[00:04:22] Well, it turns out that some enterprising people had seen that this new law presented a money-making opportunity. 

[00:04:30] They had started cobra farms, they had started breeding cobras for the specific purpose of being killed and collecting the rewards.

[00:04:41] The cobra population swelled as people realised there was a quick buck, some quick money, to be made, and cobra farms started to pop up throughout the city and nearby area.

[00:04:56] When the British government cottoned on to this, when they realised what was going on, the reward for cobra skins was stopped.

[00:05:05] So what happened? Well, this was pretty bad news if you were a cobra farmer. There was only really one potential customer for cobras, the government, and if it stopped paying you you were in real trouble.

[00:05:21] According to Horst Siebert, the German economist who recalled the story, the cobra farmers simply released their cobras into the wild, back into the city, and the government had an even bigger problem on its hands than before it had tried to “solve” the problem.

[00:05:41] This incident gave the name to the Cobra Effect, when a well-intentioned law or regulation has unintended negative consequences.

[00:05:53] It just so happens that some of the most famous examples of this are to do with animals, and specifically encouraging the reduction of animal populations.

[00:06:06] In 1902, in Vietnam, when it was under French rule, the French government was concerned with the amount of rats running through the city.

[00:06:17] So what did it do? Like the British, it offered a cash reward, but not for the skins of the rats, or the dead bodies, just for the tails.

[00:06:29] The government was flooded with rat tails, and it no doubt thought itself very clever for creating this incentive for the local population to solve the problem.

[00:06:42] But before long government officials started to notice that there were rats running around without tails

[00:06:50] What had been happening was that the enterprising local population would cut off the tails of the rats, but then let them go, still alive. 

[00:07:01] The tail wouldn’t grow back, but the rats would be able to breed, to have children, meaning there would be more baby rats with tails to cut off and money to be made. 

[00:07:14] And of course, there were plenty of enterprising people who also set up rat farms.

[00:07:21] And as you might imagine, the number of rats in the city swelled, it increased dramatically.

[00:07:28] This was over 100 years ago, and you might have thought that people would have learned by now.

[00:07:35] It turns out that we haven’t. 

[00:07:37] In 2007, in an army base in Georgia, in the United States, there was a problem with wild pigs. There were thousands of these pigs that roamed the army base and nearby area, breeding rapidly, destroying local crops, and generally being a nuisance to farmers.

[00:07:59] In order to incentivise hunters and local people to kill these pigs, the US army stated it would pay up to $40 per pig killed.

[00:08:12] The army didn’t need the entire pig to be brought in as evidence, that would be complicated, having to deal with thousands of bodies of dead pigs. 

[00:08:23] So, like French back in Vietnam over 100 years ago, to collect the reward you just needed the tail, complete with a form stating where the pig had been killed.

[00:08:38] You might be able to guess what happened. It seemed to be an initial success, and thousands of pig tails were brought in, and tens of thousands of dollars were paid out.

[00:08:50] But people were bringing in so many pig tails, saying that they had killed so many pigs, that it seemed hard to believe.

[00:09:00] There weren’t pigs wandering around with no tails, so, if these tails hadn't come from the wild pigs, where had they come from?

[00:09:11] After the army started calling around local meat processing plants, they discovered something surprising. They asked the owners of these meat processing plants whether they had ever sold pig tails before. 

[00:09:27] No, not really, came the response. 

[00:09:29] You can’t do anything with a pig tail, they were simply thrown away.

[00:09:35] But ever since the army started offering $40 per tail, meat processing plants had started receiving calls from local people offering to buy as many tails as they could get their hands on.

[00:09:49] Indeed, it was common knowledge that the “market value” of a pig tail was now not $0, it was $40, and a mini black market started to emerge for pig tails. Pigs became more valuable, creating an even greater incentive to increase production.

[00:10:12] And the Cobra Effect isn’t just for snakes, rats or pigs. 

[00:10:18] We will talk a bit more about this in the next episode, on where our rubbish goes, but in 1997 the UK introduced something called the “Packaging Recovery Note”, PRN for short. 

[00:10:33] A PRN is given to a recycling company by the UK government for every one tonne of recycling that is recycled. If a recycling company recycles 100 tonnes of recycled goods, it gets 100 PRNs.

[00:10:52] These PRNs can then be sold to the companies that produce goods that use materials like plastic, who are obliged to buy PRNs to offset the materials that go into their products. 

[00:11:06] This is what’s called the “Polluter Pays” principle.

[00:11:10] At first glance, this is good, right? 

[00:11:13] We should encourage people to recycle, and a government should provide financial incentives to recycle.

[00:11:21] But it turns out that this system might actually be reducing the amount of waste that is recycled, not increasing it.

[00:11:30] See, for one of these “Packaging Recovery Notes” to be issued, a company must show it has done the recycling. 

[00:11:38] If it’s in the UK, the recycling is weighed after it’s processed and the PRN is issued.

[00:11:46] If the recycling is exported, sent abroad to be processed, it is weighed before it’s exported and the PRN is issued. 

[00:11:56] And herein lies the problem. 

[00:11:59] With the example of plastic, only about 50% of plastic recycling is actually able to be recycled, so one tonne of mixed plastic recycling results in about half a tonne of recycled plastic.

[00:12:18] So if it is processed in the UK, 1 tonne of mixed plastic recycling leads to half a Packaging Recovery Note, but if it is exported, because the entire batch is weighed before it is separated, the company gets paid for the whole volume.

[00:12:38] And there are very little checks on whether the material is ever actually recycled after it is exported. There was a documentary from 2018 that revealed that there were huge amounts of UK “recycling” just sitting in fields in places like Turkey, Poland and Malaysia.

[00:13:00] The entire incentive system that was created to encourage people to recycle resulted in a reduction in recycling happening in the UK, no incentives for the UK to invest in recycling facilities, an incentive for dishonest recycling companies to add waste to their “recycling” that isn’t actually recycling, and ultimately for waste that might otherwise have been recycled to be sitting in a field or dump in a foreign country.

[00:13:32] It might be criminal, but it wouldn’t be the first time that people have been pushed into illegal activities because of a law that had positive intentions.

[00:13:44] Afghanistan, as you may know, is one of the world’s biggest producers of opium, the main ingredient required to make heroin.

[00:13:54] After the US invasion of the country, the occupying forces tried to figure out how to reduce opium production, and what to do with the poppy farmers - the poppy is the flower from which opium is harvested

[00:14:10] It could burn poppy fields when they were discovered, and punish the farmers for growing the crop

[00:14:17] But Afghanistan is a large, mountainous country, which is very difficult to control. And no matter how many poppy fields were burned, new ones would pop up

[00:14:30] Afghanistan was, and of course still is a very poor country, and the money that could be made from growing opium offered a rare opportunity to earn a decent income.

[00:14:43] So, the British and US officials started offering opium farmers money, cash, to burn their poppy fields and switch to other crops.

[00:14:55] Yes, these farmers would make less money if they grew other, legal, crops, but they would be paid the difference, and in fact in many cases they would be paid a lot more for burning the poppy fields, meaning that there shouldn’t be any financial reason to continue growing opium.

[00:15:15] Sounds good in practice, of course, but what it actually led to was a boom in new opium farmers, because people rushed to grow opium in order to get paid to switch.

[00:15:29] Many poppy farmers would even harvest the opium from the poppies before burning the fields, thus they were paid twice - once for selling the drug, and another for destroying the crop.

[00:15:42] Today, Afghanistan is the world’s number one producer of opium and is responsible for 80% of all of the opium produced worldwide.

[00:15:54] And for our last incentive we are going to go to a country, and indeed a continent, that we haven’t talked about yet in this episode. 

[00:16:04] We’re going to South America, and heading to Bogota in Colombia.

[00:16:09] If you have been to Bogota, you will probably have spent quite some time stuck in traffic. 

[00:16:16] The city’s traffic is notorious, and with an over-reliance on private cars and an inefficient public transport system there is a vicious cycle.

[00:16:26] Public transport is bad so people use cars, so there are more cars on the road, there’s more pollution, and the situation gets even worse.

[00:16:37] In 1998 the local government proposed what it no doubt thought was an innovative solution. In fact, it was inspired by a policy from Mexico City 8 years before, but the local government thought it would help solve the problem of traffic and pollution.

[00:16:55] Cars with different combinations of letters and numbers would be allowed to drive on different days, meaning that drivers wouldn’t be able to use their car every day.

[00:17:07] Good idea, in theory, but what it led to in practice was an increase in the number of cars per household, as people bought second cars in order to be able to drive on the days when their primary car wouldn’t be able to.

[00:17:24] To make matters worse, because buying a car is expensive, these second cars would often be cheaper, older, and more polluting models.

[00:17:36] So instead of encouraging people to take public transport on the days of the week they couldn’t drive, many just switched to more polluting cars, meaning that there were just as many cars on the road, and they were pumping out more and more exhaust fumes.

[00:17:53] As a result, pollution increased, not decreased.

[00:17:57] And we could go on. The Chinese listeners may remember Chairman Mao’s “4 pests” campaign, which encouraged the eradication of “mosquitoes, rodents, flies, and sparrows”, which he believed were responsible for destroying the crops.

[00:18:15] There were huge incentives to get rid of these pests, and the population, especially of sparrows - which are small birds - was decimated.

[00:18:26] But it turns out that these sparrows played a pretty important role in the crop ecosystem. 

[00:18:33] They ate insects. 

[00:18:36] And without any sparrows to eat the insects there was a huge infestation, damaging the crops even more than the sparrows, and contributing to a mass famine that is thought to have killed anywhere from 15 to 60 million people.

[00:18:53] And if you have ever travelled on a train in the United States and thought - hmm, this doesn’t seem to be a particularly direct route, the track seems to be looping from side to side, perhaps you were travelling on a piece of track built when the United States Congress decided to pay railway builders per distance of track laid, thus encouraging dishonest railway construction companies to lay track in loops rather than in a direct line.

[00:19:25] Now, it might be easy for us to say, with the benefit of hindsight, to look back at all of these examples and think “surely they could have thought of that before”. 

[00:19:36] Or at least, surely they could have learned from other examples.

[00:19:40] But while there might only be a small group of people who devise, who create, such a scheme, as soon as it is public there are thousands, millions, perhaps even hundreds of millions of people for whom this scheme might present a money-making opportunity.

[00:19:59] And, try as you might, for all of the second, third, and fourth-degree thinking, all of the brainstorming about how someone might try to abuse the system, or how there might be problems that people hadn't thought about, history certainly suggests that, try as you might, it’s easy to forget something that might later seem blindingly obvious.

[00:20:23] As the author of Freakonomics, Steve Levitt, once said, “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 it.”

[00:20:46] OK then, that is it for today's episode on The Cobra Effect.

[00:20:52] I hope it's been an interesting one, and that you've learnt something new.

[00:20:56] As always, I would love to know what you thought of this episode. 

[00:21:00] No doubt there are examples of the Cobra Effect that you have seen in your town, city or country, and I would love to know. 

[00:21:08] What were their intentions? What actually happened? Do you think this was something utterly predictable, or did someone find some ingenious way around it?

[00:21:19] I would love to know, so let’s get this discussion started.

[00:21:23] You can head right into our community forum, which is at community.leonardoenglish.com and get chatting away to other curious minds.

[00:21:33] You've been listening to English Learning for Curious Minds, by Leonardo English.

[00:21:38] I'm Alastair Budge, you stay safe, and I'll catch you in the next episode.

[END OF EPISODE]

Continue learning

Get immediate access to a more interesting way of improving your English
Become a member
Already a member? Login

[00:00:00] Hello, hello hello, and welcome to English Learning for Curious Minds, by Leonardo English. 

[00:00:12] The show where you can listen to fascinating stories, and learn weird and wonderful things about the world at the same time as improving your English.

[00:00:22] I'm Alastair Budge, and today we are going to be talking about something called The Cobra Effect.

[00:00:30] It’s what happens when good intentions lead to unexpected, negative consequences. 

[00:00:37] It’s a story of human psychology, of people outwitting, outsmarting, governments and policymakers, a story of human ingenuity, and provides a lesson to us all of what happens when we don’t think through the possible consequences of our actions.

[00:00:57] In today’s episode we’ll come across snakes, rats, cars, heroin, railways and rubbish. We’ll travel from Britain to India, Vietnam to the United States, but there will be one unifying factor throughout: human beings.

[00:01:15] From Bogota to Bangkok, Kabul to Calcutta, people are people, and as we’ll soon find out, people are excellent at finding opportunities when they arise.

[00:01:28] So, let’s get right into it.

[00:01:31] In life, there are broadly two ways of getting anyone to do what you want. 

[00:01:37] Whether we are talking about persuading a 2-year-old child to brush his teeth or getting the population of an entire country to pay their taxes, you can either incentivise them to do it, or punish them if they don’t do it.

[00:01:53] You might give your 2-year-old child a star for brushing his teeth or tell him he isn’t allowed to play with his toys if he doesn’t brush his teeth.

[00:02:04] In our national “paying your taxes” scenario, a country might remind citizens of their civic duty to pay their taxes, or offer some reward for paying them on time, or it might send its citizens to jail, or fine them money, if they don’t pay their taxes.

[00:02:25] Of course, this is a gross simplification, but as someone trying to get someone else to do something, you have two broad categories of options: the carrot, and the stick.

[00:02:38] And so it was in British India, in Delhi to be precise, that the British were presented with a problem.

[00:02:47] In a story recalled by the German economist Horst Siebert, the British government was concerned with the amount of cobras, poisonous deadly snakes, slithering around the streets of Delhi.

[00:03:02] You couldn’t exactly ask the snakes politely to leave, or punish them for being in the city. The government could have surely hired people to go around either killing the snakes or pushing them away from the city, but it tried to do something different.

[00:03:20] It thought, well, if we offer a reward to local people for killing cobras, people will have a reason to kill them, the population will reduce, and our problem will be solved.

[00:03:33] So, it was widely published that the British would pay for any skin of a cobra.

[00:03:40] Initially it was a great success. People started hunting cobras, killing them and bringing in their skins for a reward.

[00:03:50] The cobra population started to go down, but then there was a constant and indeed ever-increasing number of cobra skins appearing at government offices, and there didn’t seem to be any real decrease, any real reduction, in the number of cobras roaming the streets.

[00:04:11] How was it possible that there were so many dead cobras being brought to government offices, yet so many still roaming the streets?

[00:04:22] Well, it turns out that some enterprising people had seen that this new law presented a money-making opportunity. 

[00:04:30] They had started cobra farms, they had started breeding cobras for the specific purpose of being killed and collecting the rewards.

[00:04:41] The cobra population swelled as people realised there was a quick buck, some quick money, to be made, and cobra farms started to pop up throughout the city and nearby area.

[00:04:56] When the British government cottoned on to this, when they realised what was going on, the reward for cobra skins was stopped.

[00:05:05] So what happened? Well, this was pretty bad news if you were a cobra farmer. There was only really one potential customer for cobras, the government, and if it stopped paying you you were in real trouble.

[00:05:21] According to Horst Siebert, the German economist who recalled the story, the cobra farmers simply released their cobras into the wild, back into the city, and the government had an even bigger problem on its hands than before it had tried to “solve” the problem.

[00:05:41] This incident gave the name to the Cobra Effect, when a well-intentioned law or regulation has unintended negative consequences.

[00:05:53] It just so happens that some of the most famous examples of this are to do with animals, and specifically encouraging the reduction of animal populations.

[00:06:06] In 1902, in Vietnam, when it was under French rule, the French government was concerned with the amount of rats running through the city.

[00:06:17] So what did it do? Like the British, it offered a cash reward, but not for the skins of the rats, or the dead bodies, just for the tails.

[00:06:29] The government was flooded with rat tails, and it no doubt thought itself very clever for creating this incentive for the local population to solve the problem.

[00:06:42] But before long government officials started to notice that there were rats running around without tails

[00:06:50] What had been happening was that the enterprising local population would cut off the tails of the rats, but then let them go, still alive. 

[00:07:01] The tail wouldn’t grow back, but the rats would be able to breed, to have children, meaning there would be more baby rats with tails to cut off and money to be made. 

[00:07:14] And of course, there were plenty of enterprising people who also set up rat farms.

[00:07:21] And as you might imagine, the number of rats in the city swelled, it increased dramatically.

[00:07:28] This was over 100 years ago, and you might have thought that people would have learned by now.

[00:07:35] It turns out that we haven’t. 

[00:07:37] In 2007, in an army base in Georgia, in the United States, there was a problem with wild pigs. There were thousands of these pigs that roamed the army base and nearby area, breeding rapidly, destroying local crops, and generally being a nuisance to farmers.

[00:07:59] In order to incentivise hunters and local people to kill these pigs, the US army stated it would pay up to $40 per pig killed.

[00:08:12] The army didn’t need the entire pig to be brought in as evidence, that would be complicated, having to deal with thousands of bodies of dead pigs. 

[00:08:23] So, like French back in Vietnam over 100 years ago, to collect the reward you just needed the tail, complete with a form stating where the pig had been killed.

[00:08:38] You might be able to guess what happened. It seemed to be an initial success, and thousands of pig tails were brought in, and tens of thousands of dollars were paid out.

[00:08:50] But people were bringing in so many pig tails, saying that they had killed so many pigs, that it seemed hard to believe.

[00:09:00] There weren’t pigs wandering around with no tails, so, if these tails hadn't come from the wild pigs, where had they come from?

[00:09:11] After the army started calling around local meat processing plants, they discovered something surprising. They asked the owners of these meat processing plants whether they had ever sold pig tails before. 

[00:09:27] No, not really, came the response. 

[00:09:29] You can’t do anything with a pig tail, they were simply thrown away.

[00:09:35] But ever since the army started offering $40 per tail, meat processing plants had started receiving calls from local people offering to buy as many tails as they could get their hands on.

[00:09:49] Indeed, it was common knowledge that the “market value” of a pig tail was now not $0, it was $40, and a mini black market started to emerge for pig tails. Pigs became more valuable, creating an even greater incentive to increase production.

[00:10:12] And the Cobra Effect isn’t just for snakes, rats or pigs. 

[00:10:18] We will talk a bit more about this in the next episode, on where our rubbish goes, but in 1997 the UK introduced something called the “Packaging Recovery Note”, PRN for short. 

[00:10:33] A PRN is given to a recycling company by the UK government for every one tonne of recycling that is recycled. If a recycling company recycles 100 tonnes of recycled goods, it gets 100 PRNs.

[00:10:52] These PRNs can then be sold to the companies that produce goods that use materials like plastic, who are obliged to buy PRNs to offset the materials that go into their products. 

[00:11:06] This is what’s called the “Polluter Pays” principle.

[00:11:10] At first glance, this is good, right? 

[00:11:13] We should encourage people to recycle, and a government should provide financial incentives to recycle.

[00:11:21] But it turns out that this system might actually be reducing the amount of waste that is recycled, not increasing it.

[00:11:30] See, for one of these “Packaging Recovery Notes” to be issued, a company must show it has done the recycling. 

[00:11:38] If it’s in the UK, the recycling is weighed after it’s processed and the PRN is issued.

[00:11:46] If the recycling is exported, sent abroad to be processed, it is weighed before it’s exported and the PRN is issued. 

[00:11:56] And herein lies the problem. 

[00:11:59] With the example of plastic, only about 50% of plastic recycling is actually able to be recycled, so one tonne of mixed plastic recycling results in about half a tonne of recycled plastic.

[00:12:18] So if it is processed in the UK, 1 tonne of mixed plastic recycling leads to half a Packaging Recovery Note, but if it is exported, because the entire batch is weighed before it is separated, the company gets paid for the whole volume.

[00:12:38] And there are very little checks on whether the material is ever actually recycled after it is exported. There was a documentary from 2018 that revealed that there were huge amounts of UK “recycling” just sitting in fields in places like Turkey, Poland and Malaysia.

[00:13:00] The entire incentive system that was created to encourage people to recycle resulted in a reduction in recycling happening in the UK, no incentives for the UK to invest in recycling facilities, an incentive for dishonest recycling companies to add waste to their “recycling” that isn’t actually recycling, and ultimately for waste that might otherwise have been recycled to be sitting in a field or dump in a foreign country.

[00:13:32] It might be criminal, but it wouldn’t be the first time that people have been pushed into illegal activities because of a law that had positive intentions.

[00:13:44] Afghanistan, as you may know, is one of the world’s biggest producers of opium, the main ingredient required to make heroin.

[00:13:54] After the US invasion of the country, the occupying forces tried to figure out how to reduce opium production, and what to do with the poppy farmers - the poppy is the flower from which opium is harvested

[00:14:10] It could burn poppy fields when they were discovered, and punish the farmers for growing the crop

[00:14:17] But Afghanistan is a large, mountainous country, which is very difficult to control. And no matter how many poppy fields were burned, new ones would pop up

[00:14:30] Afghanistan was, and of course still is a very poor country, and the money that could be made from growing opium offered a rare opportunity to earn a decent income.

[00:14:43] So, the British and US officials started offering opium farmers money, cash, to burn their poppy fields and switch to other crops.

[00:14:55] Yes, these farmers would make less money if they grew other, legal, crops, but they would be paid the difference, and in fact in many cases they would be paid a lot more for burning the poppy fields, meaning that there shouldn’t be any financial reason to continue growing opium.

[00:15:15] Sounds good in practice, of course, but what it actually led to was a boom in new opium farmers, because people rushed to grow opium in order to get paid to switch.

[00:15:29] Many poppy farmers would even harvest the opium from the poppies before burning the fields, thus they were paid twice - once for selling the drug, and another for destroying the crop.

[00:15:42] Today, Afghanistan is the world’s number one producer of opium and is responsible for 80% of all of the opium produced worldwide.

[00:15:54] And for our last incentive we are going to go to a country, and indeed a continent, that we haven’t talked about yet in this episode. 

[00:16:04] We’re going to South America, and heading to Bogota in Colombia.

[00:16:09] If you have been to Bogota, you will probably have spent quite some time stuck in traffic. 

[00:16:16] The city’s traffic is notorious, and with an over-reliance on private cars and an inefficient public transport system there is a vicious cycle.

[00:16:26] Public transport is bad so people use cars, so there are more cars on the road, there’s more pollution, and the situation gets even worse.

[00:16:37] In 1998 the local government proposed what it no doubt thought was an innovative solution. In fact, it was inspired by a policy from Mexico City 8 years before, but the local government thought it would help solve the problem of traffic and pollution.

[00:16:55] Cars with different combinations of letters and numbers would be allowed to drive on different days, meaning that drivers wouldn’t be able to use their car every day.

[00:17:07] Good idea, in theory, but what it led to in practice was an increase in the number of cars per household, as people bought second cars in order to be able to drive on the days when their primary car wouldn’t be able to.

[00:17:24] To make matters worse, because buying a car is expensive, these second cars would often be cheaper, older, and more polluting models.

[00:17:36] So instead of encouraging people to take public transport on the days of the week they couldn’t drive, many just switched to more polluting cars, meaning that there were just as many cars on the road, and they were pumping out more and more exhaust fumes.

[00:17:53] As a result, pollution increased, not decreased.

[00:17:57] And we could go on. The Chinese listeners may remember Chairman Mao’s “4 pests” campaign, which encouraged the eradication of “mosquitoes, rodents, flies, and sparrows”, which he believed were responsible for destroying the crops.

[00:18:15] There were huge incentives to get rid of these pests, and the population, especially of sparrows - which are small birds - was decimated.

[00:18:26] But it turns out that these sparrows played a pretty important role in the crop ecosystem. 

[00:18:33] They ate insects. 

[00:18:36] And without any sparrows to eat the insects there was a huge infestation, damaging the crops even more than the sparrows, and contributing to a mass famine that is thought to have killed anywhere from 15 to 60 million people.

[00:18:53] And if you have ever travelled on a train in the United States and thought - hmm, this doesn’t seem to be a particularly direct route, the track seems to be looping from side to side, perhaps you were travelling on a piece of track built when the United States Congress decided to pay railway builders per distance of track laid, thus encouraging dishonest railway construction companies to lay track in loops rather than in a direct line.

[00:19:25] Now, it might be easy for us to say, with the benefit of hindsight, to look back at all of these examples and think “surely they could have thought of that before”. 

[00:19:36] Or at least, surely they could have learned from other examples.

[00:19:40] But while there might only be a small group of people who devise, who create, such a scheme, as soon as it is public there are thousands, millions, perhaps even hundreds of millions of people for whom this scheme might present a money-making opportunity.

[00:19:59] And, try as you might, for all of the second, third, and fourth-degree thinking, all of the brainstorming about how someone might try to abuse the system, or how there might be problems that people hadn't thought about, history certainly suggests that, try as you might, it’s easy to forget something that might later seem blindingly obvious.

[00:20:23] As the author of Freakonomics, Steve Levitt, once said, “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 it.”

[00:20:46] OK then, that is it for today's episode on The Cobra Effect.

[00:20:52] I hope it's been an interesting one, and that you've learnt something new.

[00:20:56] As always, I would love to know what you thought of this episode. 

[00:21:00] No doubt there are examples of the Cobra Effect that you have seen in your town, city or country, and I would love to know. 

[00:21:08] What were their intentions? What actually happened? Do you think this was something utterly predictable, or did someone find some ingenious way around it?

[00:21:19] I would love to know, so let’s get this discussion started.

[00:21:23] You can head right into our community forum, which is at community.leonardoenglish.com and get chatting away to other curious minds.

[00:21:33] You've been listening to English Learning for Curious Minds, by Leonardo English.

[00:21:38] I'm Alastair Budge, you stay safe, and I'll catch you in the next episode.

[END OF EPISODE]

[00:00:00] Hello, hello hello, and welcome to English Learning for Curious Minds, by Leonardo English. 

[00:00:12] The show where you can listen to fascinating stories, and learn weird and wonderful things about the world at the same time as improving your English.

[00:00:22] I'm Alastair Budge, and today we are going to be talking about something called The Cobra Effect.

[00:00:30] It’s what happens when good intentions lead to unexpected, negative consequences. 

[00:00:37] It’s a story of human psychology, of people outwitting, outsmarting, governments and policymakers, a story of human ingenuity, and provides a lesson to us all of what happens when we don’t think through the possible consequences of our actions.

[00:00:57] In today’s episode we’ll come across snakes, rats, cars, heroin, railways and rubbish. We’ll travel from Britain to India, Vietnam to the United States, but there will be one unifying factor throughout: human beings.

[00:01:15] From Bogota to Bangkok, Kabul to Calcutta, people are people, and as we’ll soon find out, people are excellent at finding opportunities when they arise.

[00:01:28] So, let’s get right into it.

[00:01:31] In life, there are broadly two ways of getting anyone to do what you want. 

[00:01:37] Whether we are talking about persuading a 2-year-old child to brush his teeth or getting the population of an entire country to pay their taxes, you can either incentivise them to do it, or punish them if they don’t do it.

[00:01:53] You might give your 2-year-old child a star for brushing his teeth or tell him he isn’t allowed to play with his toys if he doesn’t brush his teeth.

[00:02:04] In our national “paying your taxes” scenario, a country might remind citizens of their civic duty to pay their taxes, or offer some reward for paying them on time, or it might send its citizens to jail, or fine them money, if they don’t pay their taxes.

[00:02:25] Of course, this is a gross simplification, but as someone trying to get someone else to do something, you have two broad categories of options: the carrot, and the stick.

[00:02:38] And so it was in British India, in Delhi to be precise, that the British were presented with a problem.

[00:02:47] In a story recalled by the German economist Horst Siebert, the British government was concerned with the amount of cobras, poisonous deadly snakes, slithering around the streets of Delhi.

[00:03:02] You couldn’t exactly ask the snakes politely to leave, or punish them for being in the city. The government could have surely hired people to go around either killing the snakes or pushing them away from the city, but it tried to do something different.

[00:03:20] It thought, well, if we offer a reward to local people for killing cobras, people will have a reason to kill them, the population will reduce, and our problem will be solved.

[00:03:33] So, it was widely published that the British would pay for any skin of a cobra.

[00:03:40] Initially it was a great success. People started hunting cobras, killing them and bringing in their skins for a reward.

[00:03:50] The cobra population started to go down, but then there was a constant and indeed ever-increasing number of cobra skins appearing at government offices, and there didn’t seem to be any real decrease, any real reduction, in the number of cobras roaming the streets.

[00:04:11] How was it possible that there were so many dead cobras being brought to government offices, yet so many still roaming the streets?

[00:04:22] Well, it turns out that some enterprising people had seen that this new law presented a money-making opportunity. 

[00:04:30] They had started cobra farms, they had started breeding cobras for the specific purpose of being killed and collecting the rewards.

[00:04:41] The cobra population swelled as people realised there was a quick buck, some quick money, to be made, and cobra farms started to pop up throughout the city and nearby area.

[00:04:56] When the British government cottoned on to this, when they realised what was going on, the reward for cobra skins was stopped.

[00:05:05] So what happened? Well, this was pretty bad news if you were a cobra farmer. There was only really one potential customer for cobras, the government, and if it stopped paying you you were in real trouble.

[00:05:21] According to Horst Siebert, the German economist who recalled the story, the cobra farmers simply released their cobras into the wild, back into the city, and the government had an even bigger problem on its hands than before it had tried to “solve” the problem.

[00:05:41] This incident gave the name to the Cobra Effect, when a well-intentioned law or regulation has unintended negative consequences.

[00:05:53] It just so happens that some of the most famous examples of this are to do with animals, and specifically encouraging the reduction of animal populations.

[00:06:06] In 1902, in Vietnam, when it was under French rule, the French government was concerned with the amount of rats running through the city.

[00:06:17] So what did it do? Like the British, it offered a cash reward, but not for the skins of the rats, or the dead bodies, just for the tails.

[00:06:29] The government was flooded with rat tails, and it no doubt thought itself very clever for creating this incentive for the local population to solve the problem.

[00:06:42] But before long government officials started to notice that there were rats running around without tails

[00:06:50] What had been happening was that the enterprising local population would cut off the tails of the rats, but then let them go, still alive. 

[00:07:01] The tail wouldn’t grow back, but the rats would be able to breed, to have children, meaning there would be more baby rats with tails to cut off and money to be made. 

[00:07:14] And of course, there were plenty of enterprising people who also set up rat farms.

[00:07:21] And as you might imagine, the number of rats in the city swelled, it increased dramatically.

[00:07:28] This was over 100 years ago, and you might have thought that people would have learned by now.

[00:07:35] It turns out that we haven’t. 

[00:07:37] In 2007, in an army base in Georgia, in the United States, there was a problem with wild pigs. There were thousands of these pigs that roamed the army base and nearby area, breeding rapidly, destroying local crops, and generally being a nuisance to farmers.

[00:07:59] In order to incentivise hunters and local people to kill these pigs, the US army stated it would pay up to $40 per pig killed.

[00:08:12] The army didn’t need the entire pig to be brought in as evidence, that would be complicated, having to deal with thousands of bodies of dead pigs. 

[00:08:23] So, like French back in Vietnam over 100 years ago, to collect the reward you just needed the tail, complete with a form stating where the pig had been killed.

[00:08:38] You might be able to guess what happened. It seemed to be an initial success, and thousands of pig tails were brought in, and tens of thousands of dollars were paid out.

[00:08:50] But people were bringing in so many pig tails, saying that they had killed so many pigs, that it seemed hard to believe.

[00:09:00] There weren’t pigs wandering around with no tails, so, if these tails hadn't come from the wild pigs, where had they come from?

[00:09:11] After the army started calling around local meat processing plants, they discovered something surprising. They asked the owners of these meat processing plants whether they had ever sold pig tails before. 

[00:09:27] No, not really, came the response. 

[00:09:29] You can’t do anything with a pig tail, they were simply thrown away.

[00:09:35] But ever since the army started offering $40 per tail, meat processing plants had started receiving calls from local people offering to buy as many tails as they could get their hands on.

[00:09:49] Indeed, it was common knowledge that the “market value” of a pig tail was now not $0, it was $40, and a mini black market started to emerge for pig tails. Pigs became more valuable, creating an even greater incentive to increase production.

[00:10:12] And the Cobra Effect isn’t just for snakes, rats or pigs. 

[00:10:18] We will talk a bit more about this in the next episode, on where our rubbish goes, but in 1997 the UK introduced something called the “Packaging Recovery Note”, PRN for short. 

[00:10:33] A PRN is given to a recycling company by the UK government for every one tonne of recycling that is recycled. If a recycling company recycles 100 tonnes of recycled goods, it gets 100 PRNs.

[00:10:52] These PRNs can then be sold to the companies that produce goods that use materials like plastic, who are obliged to buy PRNs to offset the materials that go into their products. 

[00:11:06] This is what’s called the “Polluter Pays” principle.

[00:11:10] At first glance, this is good, right? 

[00:11:13] We should encourage people to recycle, and a government should provide financial incentives to recycle.

[00:11:21] But it turns out that this system might actually be reducing the amount of waste that is recycled, not increasing it.

[00:11:30] See, for one of these “Packaging Recovery Notes” to be issued, a company must show it has done the recycling. 

[00:11:38] If it’s in the UK, the recycling is weighed after it’s processed and the PRN is issued.

[00:11:46] If the recycling is exported, sent abroad to be processed, it is weighed before it’s exported and the PRN is issued. 

[00:11:56] And herein lies the problem. 

[00:11:59] With the example of plastic, only about 50% of plastic recycling is actually able to be recycled, so one tonne of mixed plastic recycling results in about half a tonne of recycled plastic.

[00:12:18] So if it is processed in the UK, 1 tonne of mixed plastic recycling leads to half a Packaging Recovery Note, but if it is exported, because the entire batch is weighed before it is separated, the company gets paid for the whole volume.

[00:12:38] And there are very little checks on whether the material is ever actually recycled after it is exported. There was a documentary from 2018 that revealed that there were huge amounts of UK “recycling” just sitting in fields in places like Turkey, Poland and Malaysia.

[00:13:00] The entire incentive system that was created to encourage people to recycle resulted in a reduction in recycling happening in the UK, no incentives for the UK to invest in recycling facilities, an incentive for dishonest recycling companies to add waste to their “recycling” that isn’t actually recycling, and ultimately for waste that might otherwise have been recycled to be sitting in a field or dump in a foreign country.

[00:13:32] It might be criminal, but it wouldn’t be the first time that people have been pushed into illegal activities because of a law that had positive intentions.

[00:13:44] Afghanistan, as you may know, is one of the world’s biggest producers of opium, the main ingredient required to make heroin.

[00:13:54] After the US invasion of the country, the occupying forces tried to figure out how to reduce opium production, and what to do with the poppy farmers - the poppy is the flower from which opium is harvested

[00:14:10] It could burn poppy fields when they were discovered, and punish the farmers for growing the crop

[00:14:17] But Afghanistan is a large, mountainous country, which is very difficult to control. And no matter how many poppy fields were burned, new ones would pop up

[00:14:30] Afghanistan was, and of course still is a very poor country, and the money that could be made from growing opium offered a rare opportunity to earn a decent income.

[00:14:43] So, the British and US officials started offering opium farmers money, cash, to burn their poppy fields and switch to other crops.

[00:14:55] Yes, these farmers would make less money if they grew other, legal, crops, but they would be paid the difference, and in fact in many cases they would be paid a lot more for burning the poppy fields, meaning that there shouldn’t be any financial reason to continue growing opium.

[00:15:15] Sounds good in practice, of course, but what it actually led to was a boom in new opium farmers, because people rushed to grow opium in order to get paid to switch.

[00:15:29] Many poppy farmers would even harvest the opium from the poppies before burning the fields, thus they were paid twice - once for selling the drug, and another for destroying the crop.

[00:15:42] Today, Afghanistan is the world’s number one producer of opium and is responsible for 80% of all of the opium produced worldwide.

[00:15:54] And for our last incentive we are going to go to a country, and indeed a continent, that we haven’t talked about yet in this episode. 

[00:16:04] We’re going to South America, and heading to Bogota in Colombia.

[00:16:09] If you have been to Bogota, you will probably have spent quite some time stuck in traffic. 

[00:16:16] The city’s traffic is notorious, and with an over-reliance on private cars and an inefficient public transport system there is a vicious cycle.

[00:16:26] Public transport is bad so people use cars, so there are more cars on the road, there’s more pollution, and the situation gets even worse.

[00:16:37] In 1998 the local government proposed what it no doubt thought was an innovative solution. In fact, it was inspired by a policy from Mexico City 8 years before, but the local government thought it would help solve the problem of traffic and pollution.

[00:16:55] Cars with different combinations of letters and numbers would be allowed to drive on different days, meaning that drivers wouldn’t be able to use their car every day.

[00:17:07] Good idea, in theory, but what it led to in practice was an increase in the number of cars per household, as people bought second cars in order to be able to drive on the days when their primary car wouldn’t be able to.

[00:17:24] To make matters worse, because buying a car is expensive, these second cars would often be cheaper, older, and more polluting models.

[00:17:36] So instead of encouraging people to take public transport on the days of the week they couldn’t drive, many just switched to more polluting cars, meaning that there were just as many cars on the road, and they were pumping out more and more exhaust fumes.

[00:17:53] As a result, pollution increased, not decreased.

[00:17:57] And we could go on. The Chinese listeners may remember Chairman Mao’s “4 pests” campaign, which encouraged the eradication of “mosquitoes, rodents, flies, and sparrows”, which he believed were responsible for destroying the crops.

[00:18:15] There were huge incentives to get rid of these pests, and the population, especially of sparrows - which are small birds - was decimated.

[00:18:26] But it turns out that these sparrows played a pretty important role in the crop ecosystem. 

[00:18:33] They ate insects. 

[00:18:36] And without any sparrows to eat the insects there was a huge infestation, damaging the crops even more than the sparrows, and contributing to a mass famine that is thought to have killed anywhere from 15 to 60 million people.

[00:18:53] And if you have ever travelled on a train in the United States and thought - hmm, this doesn’t seem to be a particularly direct route, the track seems to be looping from side to side, perhaps you were travelling on a piece of track built when the United States Congress decided to pay railway builders per distance of track laid, thus encouraging dishonest railway construction companies to lay track in loops rather than in a direct line.

[00:19:25] Now, it might be easy for us to say, with the benefit of hindsight, to look back at all of these examples and think “surely they could have thought of that before”. 

[00:19:36] Or at least, surely they could have learned from other examples.

[00:19:40] But while there might only be a small group of people who devise, who create, such a scheme, as soon as it is public there are thousands, millions, perhaps even hundreds of millions of people for whom this scheme might present a money-making opportunity.

[00:19:59] And, try as you might, for all of the second, third, and fourth-degree thinking, all of the brainstorming about how someone might try to abuse the system, or how there might be problems that people hadn't thought about, history certainly suggests that, try as you might, it’s easy to forget something that might later seem blindingly obvious.

[00:20:23] As the author of Freakonomics, Steve Levitt, once said, “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 it.”

[00:20:46] OK then, that is it for today's episode on The Cobra Effect.

[00:20:52] I hope it's been an interesting one, and that you've learnt something new.

[00:20:56] As always, I would love to know what you thought of this episode. 

[00:21:00] No doubt there are examples of the Cobra Effect that you have seen in your town, city or country, and I would love to know. 

[00:21:08] What were their intentions? What actually happened? Do you think this was something utterly predictable, or did someone find some ingenious way around it?

[00:21:19] I would love to know, so let’s get this discussion started.

[00:21:23] You can head right into our community forum, which is at community.leonardoenglish.com and get chatting away to other curious minds.

[00:21:33] You've been listening to English Learning for Curious Minds, by Leonardo English.

[00:21:38] I'm Alastair Budge, you stay safe, and I'll catch you in the next episode.

[END OF EPISODE]