The Cobra Effect: Why Good Intentions Don’t Solve Problems - Konstantin Kisin

The Cobra Effect and Perverse Incentives

Konstantin Kisin uses the “Cobra Effect” to argue that well-intentioned policies can worsen the problems they are intended to solve when they create perverse incentives.

The story—whose historical accuracy is uncertain—describes a bounty for dead cobras in colonial Delhi. According to the account, people began breeding cobras to collect the reward. When the bounty ended, they released the now-worthless snakes, increasing the cobra population.

Kisin also points to Mexico City’s license-plate restrictions. He says the policy prompted some people to buy additional cars to get around driving limits, undermining its goal of reducing pollution.

Applications of the Argument

Kisin extends the argument to efforts to reduce discrimination. He contends that anti-racism training, advocacy, and related organizations can create financial and professional incentives to keep identifying racism, even as those efforts aim to eliminate it. He presents this as one explanation for what he sees as rising tensions around race and gender.

On homelessness in California, Kisin argues that deinstitutionalization—encouraged in part by new psychiatric medications and concerns about abuses in mental institutions—did not adequately account for the support some people would need in the community. He says people with serious mental-health challenges can fall through the cracks, contributing to homelessness and visible street encampments.

Broader Lesson

In Kisin’s view, policymakers should assess incentives and the indirect, “second-order” effects of policies rather than relying on their stated intentions. He invokes Eric Hoffer’s warning that causes can become businesses and then rackets, and Thomas Sowell’s criticism of replacing what works with what merely sounds good. He presents communism as an extreme example of a failed idealistic narrative.

Promotion

The video concludes with a promotional segment for The Pure Gold Company. Kisin says he holds some savings in gold as protection against inflation.

Presenter: Konstantin Kisin