The "Cobra Effect" describes when a solution makes a problem worse through perverse incentives—like when French colonial Hanoi offered bounties for rat tails in 1902, leading people to cut tails and release rats to breed more, increasing the rat population.
The Cobra Effect: When Solutions Backfire Spectacularly
In 1902, French colonial authorities in Hanoi faced a serious rat problem. The sewers beneath the modernizing city teemed with rodents, spreading disease and filth. The government's solution seemed brilliant: offer a bounty for every dead rat. To avoid handling corpses, they'd pay one cent per rat tail.
Within weeks, officials noticed something odd. Rats were running through the streets—tailless.
The Birth of Rat Farming
Enterprising Vietnamese residents had discovered a lucrative loophole. Why kill rats when you could build a sustainable business? They captured rats, severed their tails for the bounty, then released them back into the sewers to breed. Some even began farming rats specifically for tail production. The bounty program intended to reduce rats had instead created a perverse incentive that increased the population.
This spectacular policy failure would later inspire economist Horst Siebert to coin the term "Cobra Effect" in 2001, describing situations where solutions make problems worse through unintended consequences.
The Cobra Story: Myth or Reality?
The term itself comes from a similar anecdote about British colonial Delhi offering cobra bounties, leading to cobra breeding farms. But here's the twist: despite circulating for 150 years, no historical evidence supports the cobra breeding claims. A 2025 investigation by the Friends of Snakes Society found no contemporary records, prosecutions, or documentation of cobra farming operations in British India.
The Hanoi rats, however? Thoroughly documented.
Modern Cobra Effects
The phenomenon didn't end in colonial times. From 2007-2008, Fort Benning Army post in Georgia offered $40 bounties for feral pig tails. The result? The pig population increased. People were breeding pigs for profit.
Other examples include:
- Soviet factories producing heavy, useless chandeliers when paid by weight
- Hospitals keeping patients longer when reimbursed per day of care
- Teachers helping students cheat when evaluated solely on test scores
- Companies polluting more to qualify for environmental cleanup subsidies
The Lesson
The Cobra Effect reveals a fundamental truth about incentives: people respond to them, but not always as intended. When you reward an outcome without considering how people might game the system, you often create profitable shortcuts that worsen the original problem.
The best solutions account for human ingenuity—especially the creative, self-interested kind. Because if there's a bounty for rat tails, someone will inevitably start a rat farm.