Explanation
What it is
Proxy metrics are indirect measures chosen to stand in for outcomes that are difficult to capture directly.
They can be useful shorthand, but risk drifting into dysfunction when they become the main focus of attention.
When to use it
- When direct measurement of success is impractical or too costly.
- When proxies can serve as early indicators of larger outcomes.
- When stakeholders need simplified, communicable benchmarks.
Why it matters
While proxies can enable progress tracking and coordination, they also introduce distortion.
Once incentives or reputations hinge on them, people start optimising for the proxy rather than the true outcome, eroding trust and alignment over time.
Reference
Definitions
Proxy Metric
An indirect indicator used when direct measurement of success is difficult or impractical.
Outcome Metric
A measure that captures the actual desired result (e.g., patient recovery rate).
The principle that “when a measure becomes a target, it ceases to be a good
Leading Indicator
A metric that predicts future performance or outcomes (e.g., customer inquiries).
Lagging Indicator
A metric that reflects past outcomes (e.g., quarterly revenue).
Incentive Distortion
Behavioural shifts caused by optimising for metrics rather than true goals.
Measurement Error
The gap between what a metric claims to represent and the underlying reality.
Alignment Drift
Gradual slippage between metrics tracked and outcomes originally intended.
Canonical Sources
- Marilyn Strathern, Improving Ratings: Audit and the Tyranny of Numbers (2000).
- Charles Goodhart, Problems of Monetary Management: The U.K. Experience (1975) — origin of Goodhart’s Law.
- Jerry Z. Muller, The Tyranny of Metrics (2018)
- Daniel Kahneman, Olivier Sibony & Cass R. Sunstein, Noise: A Flaw in Human Judgment (2021)
- Donald T. Campbell, Assessing the Impact of Planned Social Change (1976)
“Campbell’s Law” on metrics and corruption.
Notes & Caveats
- Proxy metrics are not inherently flawed; their value depends on whether they remain tethered to true outcomes.
- Over-reliance risks “gaming the system,” where actors pursue numbers instead of substance.
- Some proxies work best when used temporarily, as stepping stones toward more robust measures.
- Confusion often arises between leading vs. lagging indicators — both can act as proxies, but each carries different risks.
- Controversies persist around audit cultures: critics argue that proxies can hollow out institutions, while advocates see them as essential for comparability and accountability.
How-To
Objective
Establish proxy metrics that guide progress without detaching from real outcomes, while reducing the risk of distortion or gaming.
Steps
- Clarify the true outcome
Define the actual result you are trying to achieve (e.g., student learning, patient recovery, customer retention). - Select a proxy with alignment
Choose an indirect measure that is plausibly connected to the outcome and easy to track. - Set boundaries for use
Establish conditions under which the proxy is valid (time limits, context constraints, thresholds). - Cross-check with direct evidence
Pair the proxy with qualitative or outcome data to test its continued relevance. - Monitor for drift
Regularly review whether behaviours are shifting toward optimising the proxy rather than achieving the outcome. - Retire or recalibrate
Replace the proxy if it becomes corrupted or loses predictive value.
Tips
- Use a mix of leading and lagging indicators to balance prediction with validation.
- Document the rationale for selecting each proxy to improve transparency.
- Involve frontline practitioners in metric design to reduce blind spots.
Pitfalls
Treating the proxy as the goal
Re-anchor discussions to the true outcome regularly.
Choosing proxies for ease over accuracy
Prioritise fidelity to outcomes, not convenience.
Incentive misalignment
Stress-test how bonuses, recognition, or sanctions link to metrics.
Ignoring review cycles
Build in regular metric audits to catch drift early.
Acceptance criteria
- Documented outcome statement with associated proxy metrics.
- Evidence of stakeholder alignment on metric purpose and limits.
- Periodic review artefacts (audit notes, dashboards, feedback loops).
Tutorial
Scenario
An individual sets a goal to improve their overall health.
Because “wellbeing” is difficult to measure directly, they adopt daily step count as a proxy metric to guide their planning and routines.
Walkthrough
Decision Point
They choose steps because it is easy to track on a phone or watch, and it gives immediate feedback on progress.
Input/Output
Input
Step data collected from a fitness tracker.
Output
Visible streaks, daily targets, and weekly averages.
Action
They adjust daily routines — walking to the shops instead of driving, taking the stairs, adding evening walks — to hit their proxy target.
Error handling
Over time, they notice the risk of chasing numbers for their own sake (e.g., pacing around the living room at night) while ignoring other dimensions of health like diet, rest, or strength training.
Closure
They introduce a check-in ritual: pairing step counts with occasional fitness benchmarks (resting heart rate, flexibility tests) to prevent drift.
Result
- Before → After: They move from vague aspirations of “getting fitter” to consistent, trackable daily activity.
- They remain aware that steps alone do not equal health.
- Artefact: Weekly fitness log that includes steps alongside broader notes.
Variations
- If the proxy remains tied to outcomes (steps + improved stamina), it’s a helpful planning tool.
- If it becomes the sole measure, behaviour may skew (chasing steps instead of sleep).
- For others, alternative proxies (e.g., hours of quality sleep, weekly active minutes) may be more aligned with their broader health goals.