Metric

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When everything about a people is for the time growing weak and ineffective, it begins to talk about efficiency. ... Vigorous organisms talk not about their processes, but their aims.

G. K. Chesterton, Heretics

“When a measure becomes a target, it ceases to be a good measure.”

Goodhart’s Law

The stock-in-trade of a middle manager and the management consultant she aspires to become.

Like a key performance indicator, a second-order derivative of actual performance calculated to allow non-experts to make cavalier management decisions, usually to reduce expenditure on — aka make redundant — the person performing that function.

To be contrasted with the ineffable, inarticulable skills that are provided by a subject matter expert.

Goodhart’s law

An excellent page of resources on Goodhart’s law to be found here. Not a law of economics or sociology so much as a wry remark — professor Goodhart made it at a symposium in 1975 — that, happens to pierce modern management orthodoxy through the heart. Thus it can both spur its own real industry of academic work in sociology and systems theory, and go completely ignored in the upper tiers of corporate management.

  • Regressive: using a single metric as a proxy to measure a phenomenon that is actually multivariate — caused by several factors. Here Simpson ’s paradox is not your friend.
  • Extremal: Where a the metric is a useful indicator under normal circumstances — Mediocristan, but breaks down in extremes or unusual cases — Extremistan. Paging Messrs Black and Scholes. You know, using normal distributions of independent events to model dependent events, like human behaviour of the market.
  • Adversarial: Substitute targeting the desired outcome — a senior tranche in a portfolio of mortgages that will not default in any circumstances — with one that is rated AAA. Hello, global financial crisis.


See also