A perverse incentive is one that has unintended consequences. The world is full of these and the Wikipedia article has some great examples. Academia seems particularly prone to perverse incentives.

Incentive Intended Effect Actual Effect Researchers rewarded for increased number of publications. Improve research productivity. Avalanche of crappy, incremental papers. Researchers rewarded for increased number of citations. Researchers do work that is relevant and influential. H-index obsession; list of references no longer included in page limit at many conferences. Researchers rewarded for increased grant funding. Ensure that research programs are funded, promote growth, generate overhead $$. Time wasted writing proposals, inefficient use of public $$. Maximum of two proposals submitted to an NSF program. Discourage over-submission. You’d have to be crazy to not meet your quota these days. Teachers rewarded for increased student evaluation scores. Improved accountability; ensure customer satisfaction. Easy courses, inflated grades. Teachers rewarded for increased student test scores. Improve teacher effectiveness. Teaching to the tests; emphasis on short-term learning. Departments rewarded for increasing US News ranking. Stronger departments. Resources squandered trying to influence rankings. Departments rewarded for increasing numbers of BS, MS, and PhD degrees granted. Promote efficiency; stop students from being trapped in over-long degree programs; impress the state legislature. Class sizes increase; entrance requirements watered down; graduation requirements watered down. Departments rewarded for increasing student credit/contact hours (SCH). The university’s teaching mission is fulfilled. SCH-maximization games are played: classes are duplicated, turf wars occur over service courses.

Strong academics, it should go without saying, are highly self-motivated — this makes the academic system somewhat resistant to perverse incentive problems. Even so, it’s not realistic to expect everyone to take the high road all the time, particularly since our salaries and jobs are on the line.

What is going on? Fundamentally, the purpose of a university, while being pretty obvious, is tough to quantify. Of course this does not deter administrators, who go ahead and come up with lots of metrics that seem to be — but are not — useful proxies for the proper goals of a university. Then, these metrics are used to determine raises, promotions, and such. The results are depressing but predictable. And of course it’s not fair to simply blame the administrators — at faculty hiring time a thick CV is a lot more reassuring than a thin one.