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date: 22 February 2024

Goodhart's law 

Source:
A Dictionary of Business and Management
Author(s):

Jonathan Law

Originally, an economic theory stating that if a particular definition of the *money supply were to be used as the basis for monetary policy, the stability of its statistical relationship with spending on the economy would break down and the policy would prove ineffective. The law is now used more widely to highlight the problems of focusing on the value of any specific variable as an indicator. In simple terms, when a measure becomes a target, it ceases to be a good measure. The applications to ... ...

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