In the first post of this series, I introduced the idea of perverse incentives — situations where rules, rewards, or pressures push individuals or institutions to act in ways that ultimately harm the very people or outcomes they were meant to serve.
The concept is simple but powerful.
When incentives are misaligned, rational people will pursue their own interests in ways that produce irrational outcomes for society. Importantly, this does not require bad people or evil intent. Quite often, it is entirely predictable behaviour responding to a flawed system.
Perverse incentives sit quietly beneath many of today’s most contentious issues: political dysfunction, declining trust in institutions, poor public policy outcomes, and social fragmentation. They are rarely discussed because doing so often exposes uncomfortable truths about how our systems really work.
To make this concrete, below is a non-exhaustive list of perverse incentives operating across politics, law, media, business, academia, and public administration. The examples are varied, but the pattern is consistent.
A Catalogue of Perverse Incentives
| Person / Group | Perverse Incentive | Consequence for Society |
|---|---|---|
| Elected politicians | Prioritise re-election over long-term policy | Short-termism, growing debt, unresolved structural problems |
| Judges elected by voters | Appease public opinion to win votes | Compromised justice and unequal application of the law |
| Political parties | Pander to vocal minorities for electoral gain | Policy capture and loss of majority representation |
| Bureaucrats | Avoid risk to protect careers | Inaction, box-ticking, and policy paralysis |
| Public servants | Spend full budgets to avoid future cuts | Wasteful or unnecessary expenditure |
| Media outlets | Maximise clicks and outrage | Polarisation, misinformation, loss of trust |
| Journalists | Align with ideological peers | Homogenised narratives and suppressed dissent |
| Universities | Chase government funding and rankings | Ideological conformity, erosion of academic freedom |
| Academics | Publish fashionable conclusions | Biased research and declining credibility |
| NGOs / advocacy groups | Inflate crises to secure funding | Distorted priorities and perpetual alarmism |
| Corporations | Focus on quarterly earnings | Underinvestment in innovation and workforce |
| CEOs | Inflate share price for bonuses | Long-term damage to company health |
| Tech platforms | Optimise engagement algorithms | Addiction, social division, radicalisation |
| Social media influencers | Reward controversy over accuracy | Cultural coarsening and misinformation |
| Activist organisations | Escalate demands to remain relevant | Social division and zero-sum politics |
| Law enforcement leadership | Manage optics over enforcement | Declining public confidence and deterrence |
| Human rights bodies | Expand mandates to justify existence | Mission creep and politicisation of rights |
| Welfare systems | Disincentivise work unintentionally | Long-term dependency and intergenerational poverty |
| Immigration policymakers | Maximise intake without integration | Social fragmentation and infrastructure strain |
| International institutions | Avoid accountability to member states | Democratic deficit and public disengagement |
None of these outcomes are mysterious. They follow directly from the incentives in place.
When judges must campaign, justice becomes political.
When media revenue depends on outrage, outrage becomes the product.
When institutions are rewarded for expansion rather than outcomes, they expand — regardless of effectiveness.
The tragedy is that these systems often began with good intentions. Transparency. Representation. Compassion. Inclusion. Yet without careful incentive design, good intentions can rot into harmful results.
The uncomfortable implication is this: many of our social problems persist not because we lack solutions, but because powerful actors benefit from the status quo.
In the next post in this series, I will turn to the harder question: how do we reduce or neutralise perverse incentives without creating new ones? That is where reform becomes difficult — and unavoidable.
Understanding the problem is the first step. Fixing incentives is the only path forward.
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