Goodhart's law
When a measure becomes a target, it stops being a good measure, because people find ways to move the number without improving the real thing.
In plain English
Numbers are useful for seeing what's going on. Once people are rewarded for a number, they optimise the number. Emails sent, calls answered, meetings held: all fine to observe, all easy to game. It's named after the economist Charles Goodhart.
Uncle Gary explains
Kevin's company targeted 30% fewer meetings. It was hit in three weeks. Every meeting had been renamed a 'huddle'.
Why it matters for your money
A trading strategy optimised for one number, like win rate, can look perfect and still lose money. Judge results on several measures at once.
Where we tested it
Related terms
All glossary terms. Educational content, not financial advice.