During the time of British rule of colonial India, the government became concerned that too many deadly cobras roamed the streets. The leaders came up with what appeared to be a clever solution – pay a bounty to any citizen who brought forward a dead cobra. The “cash for snakes” program worked like a charm for a while, and the streets became clear of these poisonous reptiles.
But then a shift happened. The payouts began to increase at a staggering pace. When British officials investigated, they discovered an unexpected consequence. Entrepreneurs started breeding cobras in mass numbers, so they could be killed and delivered to the Government for a handsome reward. Outraged and refusing to be taken advantage of, the British officials immediately canceled the program. At that point, the market for dead cobras dried up completely for budding snake startups, so the entrepreneurs cut their losses by releasing the snakes into the streets of Delhi, making the original problem of wild cobras far worse. The government wasted tons of cash, only to end up with a much bigger problem.
Now known as the “Cobra Effect,” the incentive clearly drove an unintended consequence. And the plague of unintended consequences has only grown since the days of British colonial rule.