The reason a target hit exactly is suspicious
Genuine performance is spread out. When results pile up immediately above a threshold and thin out below it, the distribution is reporting the incentive.
Filed by The Archivist 2 min read
Intuition test — answer before you read on
Resolution times cluster just inside a target window and almost none fall just outside. What does the shape indicate?
Correct answer: B
Tight control produces a distribution centred inside the window, not a cliff at its edge. Bennett and colleagues found ambulance times bunching just inside an eight-minute target, and Burgstahler and Dichev found the same discontinuity in earnings around zero — the signature of threshold incentives.
A department reports ninety-five per cent of cases resolved within the target window, against a target of ninety-five. The following quarter it reports ninety-five point one. The distribution of individual resolution times, plotted, shows an unusual mass of cases finishing minutes before the deadline and almost none finishing minutes after it.
What everyone sees
Hitting a target exactly is read as competence: the team understood the goal and delivered it. Managers treat the tight clustering as evidence of process control, which is a reasonable interpretation of a well-run operation and an equally good description of a well-managed number.
What is actually happening
Discontinuities at incentive thresholds are a standard diagnostic. Bennett and colleagues documented ambulance response times bunching just inside an eight-minute target, and Burgstahler and Dichev found earnings distributions with a marked deficit just below zero and a surplus just above. Where a threshold carries a reward, the underlying distribution is reshaped near the cut point while remaining plausible everywhere else.
Why it stays hidden
The pattern hides because the summary statistic is the only figure reported. A mean or a headline percentage cannot show bunching; only the full distribution can, and full distributions are rarely published. Each individual case near the line also has a legitimate explanation, so the effect is only visible in aggregate — the one view the reporting format omits.
Look at the shape, not the summary. A cliff at the threshold is evidence about the incentive, not about the work.
Look at the shape, not the summary. A cliff at the threshold is evidence about the incentive, not about the work.
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Look at the shape, not the summary. A cliff at the threshold is evidence about the incentive, not about the work.
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Sources & further reading 3
- Bennett, Bevan & Hood, "Have Targets Improved Performance in the English NHS?", BMJ, 2006
- Burgstahler & Dichev, "Earnings Management to Avoid Earnings Decreases and Losses", Journal of Accounting and Economics, 1997
- Bevan & Hood, "What’s Measured Is What Matters: Targets and Gaming in the English Public Health Care System", Public Administration, 2006
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