The ratchet effect is an economic process that is difficult to reverse once it is underway or has already occurred. A ratchet is an analogy to a mechanical ratchet, which spins one way but not the other, in an economic process that tends to only work one way. The results or side effects of the process may reinforce the cause by creating or altering incentives and expectations among participants.

A ratchet effect is closely related to the idea of a positive feedback loop. In addition, like releasing a mechanical ratchet used to compress a spring, the reversal of an economic process that involves a ratchet effect may be rapid, forceful, and difficult to control.