When the laws of science fiction and economics intersectS

The collective effort of two economists and an anthropologist, Goodhart's Law illustrates in real-life economic systems what authors often illustrate in science fiction. You can use measurement to understand a system, but when you try to control it, that measurement becomes meaningless.

Goodhart’s Law has a long history. Its most general form comes from Robert Lucas, a macroeconomist who studied how government and business policy changes an economic system. He found that most people, when attempting to change the system, rely on historical trends in response to certain variables – like interest rates or available currency. The problem is, people tend to assume that these variables held independent credibility. They didn't. The variables were subject to policy changes just as much as the entire system was, and so any policy change that relied on them staying stable was built on sand.

Charles Goodhart, an advisor to the Bank of England, re-stated the idea, writing that “Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes.” This statement gained popularity and became known as Goodhart's law. He used it as a criticism of the economic policies of the time. People observed how interest rates and money stock responded under the policies of the previous government and sought to change them by doing the opposite of what the previous government did. It didn't work.

Goodhart’s Law transcended economics when the person who came up with the most the pithy tagline for it was Marilyn Strathern, an anthropologist. Strathern had done most of her work in Papua New Guinea, where she studied gender roles. She was most well known for The Gender of the Gift, which suggested that the people of Papua New Guinea view gender not as a strict binary, but as different parts of the same body – whether male or female. When she turned her eye on Goodhart's law, she observed that, “When a measure becomes a target, it ceases to be a good measure.” Just because such-and-such happens during good economic times doesn’t mean that exactly replicating it will reproduce those times, especially when people know that that’s the only reason it’s being replicated.

All these variations of the central rule revolve around the same idea — that a part cannot be substituted for the whole. In this way, the law that started as an economics evaluation has deep correlations with much of science fiction, especially the science fiction that focuses on disasters. In much of science fiction, from Jurassic Park to I, Robot, to Zone One, people think that, because they have a handle on specific factors, they have it all under control. They notice that certain laws, specific measurable outcomes, or everyday routines correlate with normality. As long as those things are in place, normality has to hold. It only turns out later that, when they thought they were imposing control on a situation, they were in fact only imposing control on their own measurements. The entire situation is getting out of hand while they have their eye on the wrong monitor.

[Via Economonitor and ATM]