A bounty on rats in colonial Hanoi produced more rats, not fewer

historyWikipedia1902 · Hanoi, French Indochina

A bounty on rats in colonial Hanoi produced more rats, not fewer

the gist

In 1902, under French colonial rule, the government of Hanoi in French Indochina offered a reward of one cent for every rat killed. To claim the bounty, people had to show the severed tail of a rat. Officials soon noticed rats in the city with no tails, which suggested the system had been gamed. Some rat catchers were cutting off tails, then releasing the animals so they could breed and provide more tails to collect. The population problem got worse, not better. The episode became one of the most cited examples of a perverse incentive.

so what

It shows how a rule that looks sensible on paper can reward the wrong behaviour when people respond to the incentive. The lesson applies to policy design in health, business and government.

fun fact

The Hanoi rat bounty is a classic example of the 'cobra effect', the term for incentives that backfire.

more on this

background

The Great Hanoi Rat Massacre (Vietnamese: Đại thảm sát chuột ở Hà Nội; chữ Nôm: 大慘殺𤝞於河內; French: Massacre des rats de Hanoï) occurred in 1902, in Hanoi, Tonkin, French Indochina (present day Hanoi, Vietnam), when the French government authorities attempted to control the rat population of the city by hunting them down. As they felt that they were making insufficient progress, and due to labour strikes, they created a bounty programme that paid a reward of 1¢ for each rat killed. To collect the bounty, people would need to provide the severed tail of a rat. Colonial officials, however, began noticing rats in Hanoi with no tails. The Vietnamese rat catchers would capture rats, sever their tails, then release them back into the sewers so that they could produce more rats.

The Great Hanoi Rat Massacre happened in the middle of a global plague pandemic only a few years after Swiss-French physician and bacteriologist Alexandre Yersin linked the spread of the pandemic to rodents.

From Wikipedia: Great Hanoi Rat Massacre (CC BY-SA 4.0) ↗

From Wikipedia, the free encyclopedia · text CC BY-SA 4.0

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historyThe Public Domain Review1909 · United States

D. W. Griffith’s A Corner in Wheat (1909)

the gist

In 1909 D. W. Griffith made a 14-minute film about a speculator who corners the wheat market and doubles the price of bread. A farmer sows his field while a 'Wheat King' gambles in the Chicago wheat pit; bakers raise the loaf from five cents to ten and the poor line up for bread. Griffith cut back and forth between the farm, the feast and the breadline, a technique called parallel editing, so audiences saw both ends of the economy at once. The film drew on Frank Norris's stories and on a real scheme: months earlier Chicago financier James Patten had cornered wheat, sent bread prices up and made about $5 million, roughly $185 million today.

how it works

To corner a market, a trader buys up most of the available supply and the futures contracts that promise more. Anyone who has to deliver the commodity must then buy from the cornerer at whatever price is demanded. The trader profits until the stock is released or the scheme collapses.

so what

A century on, it still shows how markets can be rigged by someone who controls supply, and how the people at either end, farmers and eaters, pay for it. It also helped establish editing as a way to argue a point, not just tell a story.

the bigger pattern

Corners have recurred whenever supply could be locked up, from the Hunt brothers' attempt on silver in 1979 to 1980 to the 'Black Friday' gold panic of 1869. Many such schemes end by collapsing, and the response is often new rules on speculation.

fun fact

In the film the Wheat King dies by falling into a grain elevator and being buried in the wheat he hoarded, an ending borrowed from Norris's novel The Octopus.

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