Wednesday, January 28, 2004
Rational expectations in admissions
I think one of the least understood and most valuable insights in economics is Goodhart's Law. `Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes,' or as restated in that link, when you try to target some measure, that measure ceases to measure what you thought it was measuring. Michael has a lovely example of this in terms of college admissions, and ways to work around the problem.
UPDATE (1/29): John Bruce reacts with a shrug.
