Are You Optimizing the Proxy? A Diagnostic for Hidden Drift in AI and Decision Systems

Many systems appear to improve while quietly drifting away from what they are intended to achieve. This paper introduces a diagnostic framework for identifying proxy optimization, a structural failure mode where measurable indicators replace the underlying reality they are meant to represent.Across AI systems, organizations, and individual decision-making, the same pattern emerges: metrics are introduced, optimization shifts toward those metrics, and performance improves at the level of measurement while degrading in real-world outcomes.The paper provides:• A clear diagnostic question to surface hidden drift• Observable signals of proxy optimization in practice• Cross-domain examples spanning AI, business…