US Health Care Reform: A Contemporary Example of
Goodhart’s Law?

June 29, 2009 · Filed Under general · 17 Comments

Goodhart’s law – named after a former chief economist of the Bank of England – says that whatever social or economic indicator or other surrogate measure you adopt as a financial target ceases to be a relevant target once you have adopted it because it loses the information content it had originally.

What is the risk that, as soon as the health care system reform becomes an intense focus of policy (as it is now), more and more attention will get devoted, not to controlling health care spending, but to continuing to spend while finding reasons why what was just spent does not form part of what could/should be reformed? Based on the developments of last 2 weeks, including the huge fight over the real cost of the proposed reform and the continuing discussion over Atul Gawande’s masterful article, “The Cost Conundrum” , my guess is that we are heading straight into Goodhart’s kingdom. Seriously, when was the last time you saw a winner of the Nobel Memorial Prize in Economics make a comment in a blog post about health care?

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