The Cobra Effect

Throughout completing my Economics A-level, there are four topics that I study. These are: Markets in Action, The National and International Economy, Transport Economics and The Global Economy. Although generally, the syllabus covers a very broad range of economic concepts and theories, there are many that without extra reading, I otherwise would never have heard of. An example of this is the Cobra Effect, which I was not aware of before listening to this Freakonomics podcast: http://freakonomics.com/2012/10/11/the-cobra-effect-a-new-freakonomics-radio-podcast/

The cobra effect occurs when an attempted solution to a problem actually makes the problem worse, therefore creating unintended consequences.

This concept was named after a failed initiative in colonial India. The government were concern about the number of venomous cobras in the Delhi and so offered a bounty (reward) for every dead cobra. However, people soon began to breed cobras in order to later receive the money. When the government became aware of this they scrapped the initiative which led the cobra breeders to release all of their cobras that were now worthless. As a result, the cobra population was actually increased. 

An example of the Cobra Effect occurring is mentioned in the Freakonomics podcast. In Mexico City, a policy was implemented in order to attempt to reduce the pollution caused by the large number of cars being driven in the city. The system meant that cars could only drive on certain days, depending on its number plate. For example on Monday, no cars were allowed to be driven with number plates ending with 1-4. The unintended consequence of this policy was that people who needed to drive every day bought a second car in order to be able to do so. Second cars being brought were often older, and less clean than newer cars. As a result, pollution in the city was increased rather than reduced.