08 February 2020

It's too complicated for current politics

James Fenton writes to the New Scientist, questioning whether planting trees will mitigate climate change:

It may not always work. Planting trees on open ground may change the reflectivity, or albedo, of land. At higher latitudes this can cause a warming effect, as three-dimensional woodland absorbs more radiation than the essentially two-dimensional open ground that it replaces. In many places new planting is likely to be targeted at upland areas, which generally possess stratified soils with a high organic carbon content. In the UK there is an order of magnitude more carbon stored in soil carbon than plant biomass. Tree planting on such soils can oxidise this carbon, potentially releasing more than the amount taken up by the trees. And practices such as ploughing land before planting can dry out the soil, causing carbon release. At the other end of the forestry cycle, modern tree extracting machines can similarly churn up the soil. So it isn’t clear to me whether tree planting will benefit the climate. Can planting trees combat climate change very much?, James Fenton, letter published in New Scientist, 8 February
When scientists can't be certain about relationship between tree planting and atmospheric levels of carbon dioxide, we need a climate change policy that allows for such uncertainty. For many years I've been advocating that we need clarity over what we are trying to achieve. Let's assume that we are trying now to slow down and stop the climate changing by reducing the level of greenhouse gases in the atmosphere. (That sidesteps the question of whether we should be concentrating on reducing climate change, or reducing the negative impacts of climate change - see here.) Planting trees might have an important, even crucial role, in determining climate outcomes. But we don't have a policymaking system that allows for the uncertainties that Mr Fenton cites, nor for any other massive uncertainties such as the effects of certain sorts of cloud - see my post here.

Our policymaking system relies on our being able to identify with reasonable certainty the relationship between cause and effect. But our society and environment are now too complex for that blithe assumption to work. We just don't know whether planting trees will mitigate or accelerate climate change, but we cannot currently make policy in any other way. l.

Which is why I suggest we target the goal we want to achieve, and reward the people who find the best ways of achieving them: ways that we cannot now identify with any certainty. Any efforts, then, must be long-term in nature, and they must encourage research, experimentation and, finally, implementation, all of which means that policy must be consistent over time. We cannot at this point convincingly advocate, say, tree planting, but what we can do is provide a system of incentives that will reward tree planting (more accurately: the right sort of tree planting) to the degree that it helps achieve society's climate change goal. We reward the outcome, and let investors work out the best ways of achieving it, giving assurances that their successful long-term efforts, which will doubtless entail many failed experiments, will be rewarded.

Long time readers will know that, of course, I'm advocating the application of the Social Policy Bond concept to climate change. We urgently need to reward people who (1) are investigating exactly the sort of relationships about which Mr Fenton writes and (2) are implementing the most successful of their activities and terminating those that are less promising. We need to encourage a wide range of diverse, adaptive approaches and we need to reward the most useful of these. Our current policymaking system is too sclerotic to contemplate such a flexible approach.  

It's not just climate change, where at least we think we can identify many of the likeliest explanatory variables. There are just as urgent, big issues, such as nuclear peace, or disaster reduction, where the complexities are so obvious even to policymakers that any activities now being undertaken to address them are half hearted, scattered, incoherent, and too poorly-financed to achieve anything useful. The Social Policy Bond concept can be applied to those issues too.

Climate change, conflict reduction, nuclear peace: these are huge, urgent problems whose causes we cannot identify with any certainty, and vary with time and geographic area. Conventional policy cannot cope with the diverse, dynamic nature of these problems, which are going to be solved only with an array of diverse, adaptive approaches. Social Policy Bonds, by targeting outcomes rather than the supposed ways of achieving them, can deal with uncertain, complex relationships between cause and effect. Current politics can't.

See here for links to my papers on Climate Stability Bonds, and here for my work on conflict reduction.

01 February 2020

Locusts, potato crisps, and nuclear catastrophe

The Economist writes:
The last big locust crisis, in north-west Africa, lasted from 2003 to 2005 and caused an estimated $2.5bn worth of damage to harvests. Getting it under control cost almost $600m, with donors footing much of the bill. That is enough to cover preventive measures in the same region for 170 years, say experts. But prevention does not attract much funding. “This is a Catch-22,” says Keith Cressman, the Senior Locust Forecasting Officer at the FAO. “Donors are interested in funding big emergencies, big problems.” And governments, unlike locusts, move slowly. East Africa is reeling from an invasion of locusts, the Economist, 1 February

So it goes. We pay attention to fast-moving problems that make a vivid visual impact. Slow-moving, unglamorous problems that cry out for policy initiatives go neglected. Prevention of emergencies, like locusts, are one example; climate change, and loss of habitat for the world's animal and plant life are others. By the time their worst effects are known and we belatedly respond, the problems have taken on overwhelming dimensions.

We respond to events if they are fast moving enough. That is a failure, in that early response to less obvious problems would be more efficient. But it's a failure too in that we are wedded to responding to noticeable events. We do not have policies that to deal with unknowable disasters whose provenance and scale we cannot foresee. We need to recognise that the maintenance of the status quo is worth targeting, even if we cannot foresee how it is threatened and especially if we cannot think about how best to go about dealing with those threats.

This is where Social Policy Bonds can play a role. They can motivate people not only to solve visible but slow-moving problems, but also to work so as to prevent those unforeseeable problems. Take, for instance, the threat of nuclear conflict. We know one would be catastrophic but we  have so few ideas about how to lower the threat level that we devote far more ingenuity (and quite possibly, funding) into digital marketing strategies for dog-food, or into developing new flavours for potato crisps. There are well-intentioned, hard-working people working to reduce threats like nuclear conflict, but their resources are limited by our historic and inefficient practice of responding only to events that are actually occurring. And we have no mechanism for rewarding the institutions that are working for peace in ways according to how well they do so. This means they are not as motivated as they otherwise might be, but more importantly that these bodies do not receive funding commensurate with the importance of their goal. Everybody in the world would suffer grievously from a nuclear exchange, but there is no means by which we can currently channel our well-founded fears into ways that will help avoid one. We have to rely on bodies such as the United Nations, non-governmental organisations, and philanthropists, most of which are - inevitably, and in common with all organisations - pre-occupied with self-perpetuation.

The answer could be Nuclear Peace Bonds. Targeting nuclear catastrophe they would be backed by governments, NGOs, philanthropists and anybody with a strong interest in human well-being. Floated on the open market they would become redeemable for, say, $1m each only after a thirty-year period during which no (lethal) nuclear explosion takes place. Floated on the open market, they might initially fetch just $10000 each, if the market thinks the probability of thirty years’ nuclear peace is low. But these bonds would be tradeable: their value would rise and fall according to how likely people think the peace target will be reached.
Initial investors would buy the bonds and do whatever they can to increase that probability. Even helping existing ways of monitoring nuclear material might see the value of their bonds double. Others, with expertise in different areas, would buy their bonds and do what they can to raise the value of the bonds still further. At every stage, the bonds would be in the hands of those most able to bring about nuclear peace. The bondholders’ goal is exactly congruent with society’s: they make money only by achieving society’s goal. At every stage of every process required to achieve that goal, incentives will motivate people to be as efficient as possible.
Rather than encourage endless speculation about what projects will make the world more peaceful the bonds would, in effect, contract out the achievement of world peace to the market. They would encourage a wide range of adaptive projects, whose sole criterion for funding would be that they would raise the probability of world peace being achieved. In this way, the governments and others who back the bonds would do what they are best at: articulating society’s goals and raising the revenue for their achievement. At the same time, the market would be doing what it is best at: allocating resources as efficiently as possible.
If nuclear peace sounds too lofty a goal, then we could start by aiming for something like peace in the Middle East. The same principle would work for natural disasters or climate change. In every case, we'd be rewarding the successful achievement of a sustained, desirable outcome, even if it's as unglamorous as maintaining the status quo in the shape of nuclear peace. It is a shame that few people seem to think along these lines.

My short piece on Nuclear Peace Bonds is here. The links in the right-hand column of that page point to papers on similar themes: Conflict Reduction, Disaster Prevention, and Middle East Peace

25 January 2020

The sad, infuriating, truth about our climate target

David Roberts writes:
Humanity has put more CO2 in the atmosphere since 1988, when climate scientist James Hansen first testified to Congress about the danger of climate change, than it did in all of history prior.... No country has implemented anything close to the policies necessary to establish an emissions trajectory toward 1.5˚C; many, including the US and Brazil, are hurtling in the other direction. The sad truth about our boldest climate target, vox.com, 3 January
What can I say without repeating myself? Six years ago I wrote that Kyoto is doomed. and that Kyoto is a dog's breakfast. Four years ago I repeated myself, saying wrote that current climate policy is doomed to fail

Less irritatingly, I've asked whether we should be more concerned about the effects of climate change than on climate change itself. One of the advantages, as I see it, of a Social Policy Bond regime is that it perforce, and at the outset, specify very clearly what we want to achieve. As applied to the climate change problem we would express our policy goal as a combination of physical, social, biological and financial measures that must fall within specified ranges for a sustained period. Only then would holders of Climate Stability Bonds be paid out. These bonds would, in effect, contract out the achievement of our multiple climate goals to the private sector, leaving it to respond to our ever-expanding scientific and technical knowledge. Current policy is rigid and arrogant, in that it is based entirely on current science and assumptions about future trends. It cannot adapt to new knowledge. These are other reasons why it's failed to capture the public imagination and hasn't, in fact, achieved anything. We need a multitude of diverse, adaptive approaches to achieving our goals relating to climate change and its impacts - many of which will have nothing to do with greenhouse gas emissions. Climate Stability Bonds would encourage them. Current policy, as well as being politically divisive, imposing extremely high upfront costs, and achieving nothing, will not.

13 January 2020

Mickey Mouse micro-objectives: rape statistics

In our complex societies, the alternative to coherent, meaningful, goals expressed in numbers are incoherent, meaningless goals expressed in numbers. That's bad enough, but there are times when numerical targets are devised such that they are not just devoid of meaning, but work in ways contrary to their ostensible intention. Here is one recently reported example:

Pinellas Sheriff’s Office boosts its rape stats without solving cases, Allison Ross, 'Tampa Bay Times', 5 January

Image result for mickey mouse
The details aren't important: it's a familiar story. The problem with this, and other Mickey Mouse micro-objectives, is that the numerical target is uncorrelated to any aspect of societal well-being. They sound good, these targets, and they might have started out as well intentioned. But they are too easily devised or perverted by people with an interest in avoiding effort. People can get away with this because few of us will challenge such high-sounding goals as 'reducing rapes', or 'dealing with crime', or 'reducing climate change'. Only in retrospect do we see how the targets and indicators associated with such ideals are so poorly or cynically designed that they have the effect of nullifying their stated goals.

The case for Social Policy Bonds rest on two pillars. One is the channelling of market forces into the achievement of our goals. The other, though, is the precise definition of these goals. For any quantitative measures of progress, our goals should not only be meaningful to ordinary people. They should be ends in themselves or inextricably linked to those ends. They need to be broad and long term, so that solving one problem can't occur simply by creating others, or shifting the problem into another region, or kicking the can down the road.

So how would Social Policy Bonds deal with rape? One way forward could be to target for reduction -  nationally - the numbers of people in anonymous surveys who respond 'yes' when asked whether they have been raped. That could form one of an array of indicators, which could include some that are currently used. All such indicators would have to fall within a prescribed range for a sustained period before the bonds would be redeemed. Choosing these indicators wouldn't be simple. But what is the alternative?

For more about Social Policy Bonds see SocialGoals.com

04 January 2020

Input legitimacy: the Swiss approach

The Economist writes:
One of the great arguments for democracy is what Fritz Schapf, a German scholar of politics, calls “input legitimacy”. Even if a system does not give people what they want, the fact that those running it reflect a democratic choice is legitimising. Can technology plan economies and destroy democracy?, the 'Economist', 18 December 2019
 This chimes with some decades-old research done in Switzerland. It is a shame that the Swiss model of ‘direct democracy’ is something of an outlier. Switzerland has a federal structure whose 26 cantons have use assorted instruments of direct democracy, notably initiatives to change the canton’s constitution, and referendums to stop new laws, change existing ones, or prevent new public spending. Cantons vary in the ease with which these instruments can be used. Research by Bruno Frey and Alois Stutzer of the University of Zurich showed that, even after allowing for other variables, the more democratic the canton, the more people living there reported being happy. The effect is significant:
 [T]he marginal effect of direct democracy on happiness [was found to be] nearly half as big as the effect of moving from the lowest monthly income band (SFr980-1,285, or $660-865) to the highest (SFr4,501 and above). Happiness is a warm vote, the 'Economist', 15 April 1999
By looking at the reported happiness of foreigners (that is, people who cannot vote in the referendums) living in the Swiss cantons, the researchers found that it wasn’t just the effect of the decisions made by direct democracy that led to greater well-being. The participation in the process itself accounted for most of the increased happiness.

This is a position I have long advocated. Social Policy Bonds would target outcomes: transparent, verifiable outcomes that are meaningful to ordinary people. Discussion and debate about these outcomes and their priority is inherently more accessible to ordinary people. The current political systems in most democracies rarely declares their goals (if they have any) in terms that mean anything to natural persons. Their goals have more to do with retaining power, and usually mean favourable treatment for the most powerful, especially government agencies and big business, at the expense of small businesses and ordinary citizens. The system gets away with this, because its goals are expressed vaguely if at all, and policymaking takes the form of recondite, legalistic discussion about institutional structures and funding. Social Policy Bonds in contrast would subordinate all such processes to meaningful, explicit goals. This would draw more people into the political process. As the long-standing research into Swiss direct democracy shows, this is an end in itself, as well as a means to greater well-being.

27 December 2019

Politics as career drama

There's much that's worthy of quote in Greg Jackson's latest article in Harper's Magazine, but I will limit myself to this for now:
As things are, the job of politicians is to feed the emotional-entertainment industry that we call “news,” which is accomplished by grandstanding and self-promotion. Reporters and pundits cover politics by analyzing how politicians succeed and fail as spokespeople and media figures. Interest shifts, by turns, to how the game is played, how the media fits into this game, and, eventually, how journalists do their jobs. The news today, properly understood, is about the careers of politicians and journalists. It is career drama. (My italics) Vicious Cycles, Greg Jackson, 'Harper's Magazine', dated January 2020
In the absence of any more meaningful measure of politicians' competence, we focus on how they appear in the media. But what else can we do? The links between what politicians say, what they mean, and what actually happens are tenuous, obscure or non-existent. Only rarely can we say that this politician did something that led to that outcome. Society is just too complex to identify cause and effect with certainty. There are exceptions: decisions to go to war, for instance. But for the most part, when wondering whom to vote for we depend on the news or, as Mr Jackson accurately puts it, "news".

When seeing the wide, and widening, gap between politicians and ordinary citizens, we are right to draw attention to the baleful influence of the wealthy organisations - public- and private-sector - who, along with their lobbyists, are the only people that have the time and motivation to understand how policy is made and how they can manipulate it for their own benefit. If only there were a means by which we could make politicians enact policies that benefit the people they are supposed to represent.

Social Policy Bonds are one such means. You might have heard of Social Impact Bonds, which are the non-tradeable version of my original (long pdf, scroll to page 266) idea. There are several reasons why I think we need the bonds to be tradeable if they are going to make significant gains in policy effectiveness and efficiency. I write about those reasons here and here. The important point is that the bonds reward outcomes: outcomes, moreover, that are meaningful to ordinary people and which, in fact, ordinary people can help identify and prioritise. Because Social Policy Bonds are tradeable they can target long-term goals, whose pathway to achievement is unclear. We can therefore target remote goals, such as universal literacy or world peace, because we do not have to specify in advance how those goals shall be best achieved, nor whom we shall charge with achieving them. The market for the bonds would ensure that only the most efficient projects will be rewarded. The long-term nature of the bonds means that investors will have incentives to research a wide range or initiatives, and persist only with the most efficient.

Our biggest, most urgent challenges - such as climate change or conflict reduction - will require a mosaic of diverse, adaptive projects. These are exactly the sorts of projects that government at any level implement. The top-down approach is good for articulating society's wishes, and for raising the revenue for their achievement, but when it comes to actually achieving any but the most obvious goals - the ones with the clearest link between cause and effect - it fails. A Social Policy Bond regime would see politicians doing what they do well: helping society define its goals and raising taxes. But it would contract out the achievement of these goals to more motivated investors, who have a sustained interest in achieving their goals - which are exactly the same as those of society. Economic theory and all the evidence tell us that competitive markets are the most efficient way of allocating scarce resources to achieve prescribed ends. Under a Social Policy Bond regime it is society that would determine these ends, and market forces would channel the market's incentives and efficiencies into achieving them.

15 December 2019

Give up control over the 'how'

Joseph O'Neill looks at US politics and how wealthy left/'liberal' donors' support differs from their conservative counterparts' in the US:
[T]he liberal political apparatus is “largely guided by the moral whims of rich people.” ...Liberal megadonors with private foundations are reluctant to invest in uncharismatic, long-haul grassroots projects. They are typically afraid of appearing “political.” Instead, they favor ameliorating the plight of the visibly needy ... [whereas] right-wing donors have spent their money more productively. They have created and supported entities (the American Legislative Exchange Council, ... the State Policy Network, Americans for Prosperity, the Federalist Society, etc.) dedicated to developing durable structures of power and fanaticism. No More Nice Dems, Joseph O’Neill, 'The New York Review of Books', dated 19 December
I'm not sure about either strategy. Well, I am sure they work for the donors, and there's an argument that the left already has much of the media, schools and universities in their grip anyway, and not only in the US: it doesn't have to create new ones. To quote Thomas Sowell:
The most fundamental fact about the ideas of the political left is that they do not work. Therefore we should not be surprised to find the left concentrated in institutions where ideas do not have to work in order to survive. Thomas Sowell, 'The Survival of the Left', in The Thomas Sowell Reader, 2011
But the point is that the wealthy donors of neither the left nor right seem to care about outcomes. They fund glamorous, high-profile projects or buildings, foundations, think-tanks. They lobby government. They have in common that, even if they genuinely wish to improve the well-being of certain groups, they won't target the outcomes that those people most care about. Why not? Because, I think, in this respect donors resemble politicians and bureaucrats: they will not willingly relinquish control. They think they know how best to achieve results, or they want everyone to associate them with identifiable buildings, institutions or ideas - whether they do any long term good or not.


Social Policy Bonds are a means by which the wealthy could both articulate society's wishes and channel funds into satisfying those wishes, without actually doing the work themselves. Rich philanthropists could, instead, reward the achievement of our goals, without dictating who shall achieve them nor how they shall be achieved. They would still have the power to articulate these goals but, under a bond regime, they would have to relinquish the control over how these goals are to be achieved. That would be probably be difficult for billionaires to accept. But to address our most serious problems we need diverse, adaptive solutions, with time horizons longer than those of individual lifetimes. 

As a species, we now have massive potential to solve those problems that have bedevilled mankind for millennia: war, for instance, poverty, illiteracy, disease. Social Policy Bonds are a means by which we could motivate people toward solving these problems. Governments, unfortunately, aren't likely to be the first to issue them. They owe too much to existing career paths, methods, and institutions. But billionaires? They could be more amenable to persuasion. They want to see the right thing done. All it would take is a bit of humility on their part so that they don't feel they have to be the ones doing it. 'Letting go' of the need for acknowledgement and short-term results, could be as helpful to society as letting go of emotional hurts can be to the individual.

10 December 2019

Improve healh by spending less on health care

Richard Smith, the former editor of the British Medical Journal gets it:
Another common mistake is to confuse health care and health. Health care accounts for perhaps 10% of health. Income is the main determinant of health. Spending more on health care crowds out spending on things like housing, education, the environment and benefits, which are more important for health. The NHS doesn’t need more money, it needs a radical rethink. Richard Smith, Letters to the editor, the 'Economist', 7 December
Exactly. The best, most efficient way, of achieving our health goals is not necessarily to spend more on healthcare, just as the best way of reducing crime might not be to spend more on policing. In health, as in other policy areas, suffers from its inherently uniform, top-down approach, heavily influenced by large corporations. Government can also be short term in its thinking, reactive rather than proactive, and disdainful of innovation while favouring tried, tested but failed approaches. It has to make its resource allocation decisions on the basis of data that are necessarily incomplete. How can it know in detail the effect that spending on, say, sophisticated ultrasonic diagnostics will have on the overall health of the nation, as compared with nudging us to floss our teeth daily?

Health expenditure is influenced by groups of medical specialists with little incentive or capacity to see improvements in the overall health of a large population as an objective. Funding decisions are also heavily influenced by the public profile of a disease or its victims, rather than on what would best meet the needs of society. As Dr Smith says, health is also a function of housing, income, education and the environment, as well as more factors such as diet, and exercise. Research shows the beneficial effects on health of green spaces in our cities (see here (pdf) for instance). The way government is currently structured, with its discrete funding bodies all being lobbied by the medical industry, makes it unlikely that such difficult-to-quantify benefits will influence funding decisions.

We cannot expect a government nor any single organization to identify the huge numbers of variables, with all their time lags and interactions, that influence the nation’s health. We can, though, devise a system that rewards people who explore and implement the most cost-effective health solutions, even when circumstances and knowledge are changing continuously. I have tried to do this with my essay on Health Bonds, which would aim to distribute scarce government funds to where they would do most good, as measured by such indicators as Quality Adjusted Life Years.

By issuing Health Bonds, government would reward successful initiatives for improving health regardless of how these initiatives work or who implements them. Government would still articulate society's broad desired health outcomes, and still raise the revenue for their achievement. But it would contract out the achievement to motivated investors in a way that rewards success, and only success. Health Bonds, would stimulate diverse, adaptive ways of achieving goals, in ways that we cannot anticipate, and that could well entail dealing with problems such as those identified by Dr Smith. 

23 November 2019

It's worth investing in nuclear peace

There's very little to cheer about here:
As China makes its nuclear forces more credible—less vulnerable to pre-emption, and more likely to get through missile defences—America grows nervous, argues Caitlin Talmadge of Georgetown University. If America cannot hope to destroy most of China’s missiles, then it cannot easily threaten China with a nuclear strike without putting its own cities at risk. American policymakers worry this will embolden China and unnerve American allies like Taiwan and Japan.... Chinese officials are overconfident about their ability to prevent a conventional war from turning nuclear, they argue, while American ones are overconfident about their subsequent ability to keep a nuclear war limited in scope. Making things worse, the two countries lack a dedicated nuclear dialogue, largely because China is wary of giving away too much information. China’s nuclear arsenal was strikingly modest, but that is changing, the 'Economist', 23 November
The stakes here are enormous, but we are proceeding haphazardly toward an unknown, perhaps catastrophic, destination. There are people and resources aimed at minimising the risk of nuclear conflict but I think there are too few, given the potential for calamity. Unfortunately, we have no way, under our current national and supranational political systems, to channel more resources - more effective resources, that is - into minimising the risk of nuclear conflict.

Actually, the goal of sustained nuclear peace makes an ideal target for the Social Policy Bond idea. One, because it's a complex, long-term goal that will require diverse, adaptive solutions. Two, it's an easy goal to verify. And lastly, it's a goal that, on all the evidence, including that of the Economist article, is unlikely to be reached under current policy.

My proposal would be to issue bonds that reward a sustained period of nuclear peace. This could be defined, as, say the non-detonation of a nuclear device that kills more than 50 people for 30 years. They could be backed by a combination of governments, non-governmental organisations, philanthropists and members of the public. With sufficient backing the bonds would help offset and (one hopes) outweigh the the incentives currently on offer, which essentially are those of the military and weapons manufacturers to maintain a nuclear posture.

Those billions of us who would benefit from nuclear peace are presumably a massive numerical majority, but we have few means of channel our wishes effectively. The tendency is to assume that governments will do what's necessary, with the support of hard-working, well-intentioned people in the private sector. But the rewards to all these people are not linked to their success. This is unhelpful in itself but, more importantly, it discourages investors who, seeing little opportunity to benefit from working to reduce nuclear conflict, will focus instead of less edifying enterprises. Most important of all is that our current strategy is just not working.

We need to reward those who achieve nuclear peace at least as much as those working to undermine it. We don't know exactly how to reduce the chances of a nuclear exchange, nor who will be best placed to do so, over the long period during which our goal is to be achieved, but we have no excuse for not encouraging people to find out. Nuclear Peace Bonds would apply the Social Policy Bond principle to this goal. Investors in the bonds would form a protean coalition of people dedicated to achieving it as efficiently as possible. Their goal would be exactly the same as society's. Human ingenuity knows no limits. Currently, too much of it is devoted to relatively unimportant or socially questionable goals. Nuclear Peace Bonds would channel our ingenuity, and stimulate more of it, into minimising the risk of a global catastrophe.

My short piece on Nuclear Peace Bonds is here. The links in the right-hand column of that page point to papers on similar themes: Conflict Reduction, Disaster Prevention, and Middle East Peace

09 November 2019

Effective policy needs experiments

Long-term, remote goals, such as universal literacy, the ending of war, or the elimination of poverty in developing countries, will require a range of solutions, varying over time and space, for their achievement. Conventional approaches to large-scale, complex problems rarely rely on hard evidence. Too often we read about the supposed 'root causes' of, for instance, violence being poverty and violence, with little supporting evidence. Sure, in some circumstances, tackling such alleged root causes might be the most efficient way of solving a problem. But in others such faith might be misplaced, or even counterproductive. Even Social Impact Bonds are limited when it comes to large-scale, remote goals, because they are inherently short term in nature, and don't allow for new entrants into the problem-solving services. (See here and here for why I am ambivalent about SIBs.)
 
Social Policy Bonds are different. Because they're tradeable, they can target long-term goals whose achievement might take years beyond the planning horizon of  investors. This allows bondholders to benefit from copious research aimed at finding, and funding, only the most efficient initiatives.

This sort of research and experimentation in matters of policy is rarely encouraged or rewarded, so I'm pleased that this year's Nobel prize for economics was awarded to three economists, Abhijit Banerjee, Esther Duflo and Michael Kremer, who used experiments to look at approaches to health care, education and entrepreneurship.

In the mid-1990s Mr Kremer ...began studying poverty with methods more commonly associated with chemists and biologists: randomised trials. If human capital—health, education, skills and so forth—is essential for development, then economists had better make sure they understand where it comes from. In Kenya he conducted field experiments in which schools were randomly divided into groups, some subject to a policy intervention and others not. He tested, among other things, additional textbooks, deworming treatments and financial incentives for teachers linked to their pupils’ progress. .... Educational resources—textbooks, say—turned out to do little for learning outcomes. Making pupils healthier improved their attendance, but did not necessarily mean they learned more. The experiments had a larger result, however: they taught the economics profession that randomised trials could work in the field. A Nobel economics prize goes to pioneers in understanding poverty, the 'Economist', 17 October
Right: they can work if the incentives are there to conduct them. The governments of all too many countries seldom think of offering such incentives. Philanthropists sometimes do, though (see here for example). They could take the lead in issuing Social Policy Bonds for the big, urgent goals that existing bodies are too small, too selfish or too incompetent to target effectively. See here for my piece on Social Policy Bonds published by a journal for philanthropists.