Nate Hagens defines 'perverse incentive' as an unintended and counterproductive outcome arising from a policy, market mechanism, or behavioral dynamic that, while seemingly well-intentioned, encourages actions contrary to the common good or long-term sustainability. He explains that these incentives often stem from a misalignment between short-term rewards and long-term consequences, leading individuals or organizations to exploit the system to their advantage, ultimately causing more harm than benefit. Hagens highlights that perverse incentives are pervasive in socio-economic systems, driving phenomena such as environmental degradation, resource depletion, and social inequities by promoting behaviors that undermine collective wellbeing and resilience.

See also: carrying capacity, fossil fuel, economic system, income inequality, wealth inequality