The case for Social Policy Bonds

This piece of about 2700 words makes the case for a change in the way we make policy to focus on outcomes, for the injection of market incentives into the achievement of these outcomes, and then for Social Policy Bonds. I will try to get it published elsewhere. 

The gap between politicians and public

There’s a large and growing gap between politicians and the people they are supposed to represent. This has always been true in autocratic countries, but it is now also a feature of democracies. I believe this stems from the increasingly opaque ways in which government works, such that the only people who can follow policymaking closely are politicians themselves, lawyers, wealthy corporations or their lobbyists. Our policymaking process is so obscure, so unknowable by ordinary people, that the alienation of politicians from the public is both inevitable and self-entrenching. Whether some of this is deliberate or not is less important than the reality that it’s growing and that there are few who have an interest in stopping it. Such a system is ripe for gaming and manipulation but, even when it works according to the letter of the law, it inherently favours those who have the time and inclination to involve themselves - or their paid agents - in the minutiae of the policymaking process.

I believe this his happening because our policymaking system focuses on concerns that have little obvious relevance to members of the public: institutional structures and funding arrangements, law changes, and macroeconomic abstractions. Oracular pronouncements of lofty goals are sometimes heard, but nothing can be pinned down, and nobody takes them seriously. It is almost as if political systems the world over, whatever their origins, ere purposely designed to alienate the public, so that any link between what politicians say and what ordinary people actually experience is undetectable.

Because of this, we are reduced to choosing our representatives on the basis of their public image, their ability to produce superficially convincing soundbites or, perhaps most portentously, identity. That is, those of the electorate who can be bothered to turn out to vote; the rest of us have taken on the learned helplessness that is characteristic of subjects that come to believe that the unpleasantness of their lives can neither be improved nor avoided.

The result is clear, even in democracies: disenchantment with our leaders and with democracy itself. Given the pervasive cynicism, it’s hardly surprising that there’s a disturbing drift toward authoritarianism and demagoguery, with its inflammatory sloganeering that does at least express ordinary people’s concerns in language we can understand.

The system’s complexity makes it difficult to share policy decisions and dilemmas with non-members of the political caste. As policymaking becomes more obscure, so politicians find it more difficult to communicate with the public. This is true of all professions, but it matters more for politicians because their decisions affect us all. The mistrust is mutual and self-perpetuating: we don’t trust politicians and we don’t understand their language, so why should they bother us with unpalatable truths? So now politicians don’t even share with us the most fundamental notion of policymaking - that all policy choices will create winners and losers - because they know we’d see it as a lie or a self-serving admission of incompetence.

It’s essential, I believe, to close the trust gap, precisely for this reason. Politicians need to make hugely important decisions on our behalf, on social and environmental matters, and there will inevitably be people who lose out as a result. Buy-in from the public will be essential, but the obscurity of the policymaking system means that it won’t happen.

We could begin to close the gap, I believe, by formulating policy in terms that are comprehensible to non-specialists.

Closing the gap: outcomes and buy-in

Society has become so complex that it’s difficult to identify cause and effect. There are too many variables and too many time lags. Gone are the days when John Snow could trace a cholera epidemic in London to a polluted water pump. Today’s health problems, like most of our biggest and most urgent social and environmental problems, have many causes, known and unknown. Today’s policymakers can try to deal with, say, childhood obesity by pushing out dietary recommendations, taxing sugary drinks and encouraging sport or nominating a 'childhood obesity tsar’. Well-intended measures that could have some impact, but do not encourage people to search for solutions or approaches that lie beyond the expertise of policymakers or that threaten the livelihoods of their advisors.

As with childhood obesity, so with health more generally, literacy, employment, crime and water quality: their causes are various, change all the time and demand a long-term vision. Even more so do the global scourges that are more challenging and urgent: climate change and other environmental depredations; wars between and within states and the rising possibility of nuclear conflict.

Outcomes

An essential first step is to express our urgent, long-term policy goals as outcomes that are meaningful to ordinary people, as distinct from billionaires, corporations or single-issue bodies, be they public- or private- sector. Such outcomes would be more comprehensible to more people than the unstated, incoherent, vague, or platitudinous goals that dominate our public political discourse. Discussion about outcomes would be more accessible, and there is likely to be far more consensus over such long-term goals than over any alleged ways of achieving them. When people can realistically participate in policymaking, we will become aware of its inherent limitations and trade-offs. This means quite a few things, but the most important is buy-in: the reconnection of citizens with their policymakers; the sharing of responsibility and concern for policy initiatives.

This matters hugely when government is going to have to rein in activities to which we have become accustomed, in the face of new threats. Climate change and environmental problems in general are areas in which we need a coherent response to large and urgent challenges. So too is the debatable need to divert funding from social welfare to defence. These and other policies create losers as well as winners.

Converting aspirations into verifiable goals

Broad, meaningful goals – fine, but how are we to express them in ways that make them amenable to targeting? A single goal, such as an improved literacy rate for seven-year-olds, would be relatively easy to target. But broader goals could also be targeted. Take improvements in a population’s physical health. We could target a range of variables, including life expectancy at birth, healthy life expectancy, infant mortality, age-adjusted mortality rates, disability-adjusted life years and more subjective measures such as the proportion of people reporting good rather than poor health. A national goal set by people and experts could be expressed as a set of these variables, each of which would have to fall within an approved range for the overall health goal to be deemed achieved.  

---

Box: Organisations

When targeting long-term goals, I think it’s essential not to hand over responsibility for achieving them to existing organisations. We should not accept these organisations as a given, because:

·       Organisations have a limited purview; they have little incentive to consider approaches that differ from their current methods.

·       They aren’t structured in ways that optimise efficiency: typically, they reward their employees for activity or time, rather than success.

·       Their prime goal, whatever their mission statement says, will inevitably become self-perpetuation.

Example: if in one part of the country the crime rate is high, the best approach might have nothing to do with giving the police more money, or banning alcohol, or even opening up youth clubs: it might be to subsidise existing businesses in the area. Another example: we might find that the best way of improving society's health goals is to cut back on road traffic, or impose speed limits, or to lay on free taxis for under- 20-year-olds after midnight. The point is that existing organisations whose remit is to fight crime or improve health have no incentive to investigate options such as these examples, which lie outside their purview. As well, top-down decisions by government will almost always fail to recognise that the best approaches to solving our social and environmental problems vary over time and geographical area.

---

Summing up

To sum up: I believe we need to re-orientate our policymaking so that it targets long-term, broad outcomes that are meaningful to, and approved by, ordinary people, in ways that will encourage a range of diverse, adaptive approaches. These goals could be national or even global. Government could set long-term goals, in consultation with experts and the public. We should not assume that existing service providers, be they public- or private-sector are the best organisations to achieve these outcomes. We need to create a system that motivates the achievement of society’s targeted goals, not any of the activities allegedly done to achieve them.

In economic theory, and on all the evidence, markets are the best way of allocating society’s scarce resources. Unfortunately, they have been corrupted, manipulated and subverted to favour powerful interest groups at the expense of society and the environment. These interests work to manipulate the regulatory environment to secure their position against competitors. But there’s nothing inevitable about leaving social and environmental goals to government bodies which, however hard-working and well-meaning, lack the market’s incentives to reward success and – just as important – terminate failing approaches. Market forces can, and should, be properly channelled into the public good.

Social Policy Bonds

My suggestion is that we channel the market’s incentives and efficiencies into the achievement of society’s social and environmental goals by means of a new financial instrument: Social Policy Bonds.

Their aim is to contract out the achievement of these goals to investors in the bonds, which would be redeemed for a fixed sum only when the targeted goal had been achieved and sustained. These goals can be national or global, and the example I will give is a global one, chosen because of its urgency: nuclear peace.

Nuclear Peace Bonds would be backed by funds raised from the public sector, the private sector, or both. These bonds would be floated on the open market for whatever price they fetch. They would be redeemable for a fixed sum only when there had been nuclear peace for a sustained period of, say 30 years. This goal, being remote, would mean that the bonds would sell for very little when first offered to the market. So any activity that increased the likelihood of sustained nuclear peace would see an improvement in the bonds' value. Nuclear Peace Bonds would create a protean coalition of bondholders with a powerful incentive to co-operate with each other and to research, refine and implement those measures thought to be, at any given time, most likely to bring about nuclear peace. With such a big, remote objective, no single approach will work. A Nuclear Peace Bond regime would stimulate a wide range of diverse, adaptive approaches to the threat of nuclear catastrophe. All bondholders’ initiatives would be in service of the one overarching goal: a sustained period of nuclear peace. The secondary market for the bonds would ensure that, at all times, the bonds would be in the hands of those who believe they can help achieve the goal most efficiently. Inefficient operators, or those who had done their bit, would sell their bonds to more efficient operators, to whom they would be worth more. Unlike some other global problems, Nuclear Peace Bonds would have a clear and verifiable metric, such as the avoidance for 30 years of a military nuclear explosion that kills more than 100 people within 24 hours.

Incentives

Currently, there's a jarring mismatch between, on the one hand, the fears of, and risks to, almost everyone on Earth from nuclear conflict and, on the other, the efforts devoted to mitigating them. A shift in resources away from, for example, ingenious ways of exploiting financial markets or selling dog-food, would benefit all of us. But our current policymaking system doesn't encourage such a re-orientation of priorities. Incentives now favour those few who have acquired power – including psychopaths - to do whatever they can to retain it. The wish of the billions of people who don’t want to live in a world of nuclear conflict is too diffuse to prevail. Of course, there are many hard-working employees of existing organisations who are trying to achieve peace. But – let’s be frank – they are paid for turning up at the office and putting in the hours, rather than for success.

A Nuclear Peace Bond regime would reward those who achieve peace, whoever they are and however they do so. It’s an admittedly unconventional approach. But the conventional approach has brought us to the brink of nuclear catastrophe. The taboo against threatening the use of nuclear weapons has been broken. It now appears inevitable that, unless we rebalance the incentives, the taboo against their use will also be broken. It’s now time to encourage and reward diverse, adaptive and successful ways of dealing with the looming nuclear threat.

More applications of Social Policy Bonds

Not all social problems are best addressed with the Social Policy Bond approach. The bonds are best deployed:

·       When goals are long term.

·       When existing efforts are failing.

·       When diverse, adaptive approaches are probably going to be necessary.

·       When financial rewards to those involved in achieving objectives are uncorrelated with their effectiveness in doing so.

·       When the goal and progress toward it can be readily and objectively monitored.

Many environmental goals satisfy these criteria including, at the global level, climate change; and at the national level, air and water quality. Other national goals that could be targeted for improvement are literacy, employment and health.

Advantages and potential pitfalls

Social Policy Bonds would target outcomes directly, rather than the supposed means of achieving them. They would channel the market’s incentives and efficiencies into the achievement of explicit, transparent goals that are meaningful to ordinary people. Because of this, they would encourage public participation in policymaking, and hence buy-in. They can address long-term, complex goals, by incentivising research into, and implementation of diverse, adaptive approaches to solving our social and environmental problems. One advantage of their being tradable is that the market for them would generate useful information about the costs of achieving various goals.

One potential pitfall is free riding: people could buy the bonds with no intention of helping to achieve the goal they target. In such a case, the value of their bonds would fall, so they would either sell their bonds at a loss, if too many bonds were in the hands of these passive investors, or make some money for no effort if, despite their holdings, the goal were achieved anyway.

Optimising roles

Under a bond regime, government would concentrate on the things it does well:

Articulating society’s wishes; currently done poorly because government concentrates on the short term and, if it does make explicit its policy goals, does so in terms that are meaningless to ordinary people. A Social Policy Bond regime would improve this by obliging governments to consider and prioritise long-term goals, in consultation with the public. Government could continue to do that, as it’s something it does well – and something that only government can do.

Raising the revenue needed to achieve these wishes; the flaw here is that government is tempted to borrow more than it should, for consumption rather than investment. Government is good at raising revenue, but that revenue is often misdirected because government's goals aren't aligned with those of the public. 

Where government often fails is in trying to achieve these goals, because it is too preoccupied with the day-to-day running of the country. This is where Social Policy Bonds, by injecting the market’s incentives into the achievement of society’s long-term goals, could be a hugely significant improvement. A bond regime would see government doing what it does best, and markets doing what they do best.

Social Policy Bonds: past and future

Social Policy Bonds, as I’ve conceived them, have not been issued. Social Impact Bonds, variously known as pay-for-success bonds etc, are a non-tradeable variant of my original idea. They are currently being issued in about 25 countries; I’ve had no involvement with them and have mixed views on them. Their lack of tradability greatly limits the time frame and scope of the bonds’ objectives. They might serve as a stepping stone on the way to Social Policy Bonds, or they could discredit the whole notion of outcome-based policy to the public.

Links

All my work on Social Policy Bonds is available for free download from SocialGoals.com.

© Ronnie Horesh, October 2026 

Copper, nappies, and the environment

Renewable energy is not an end in itself. Replacing fossil fuels with renewables also entails environmental damage. Copper, for example: 

Problem is, that the generation and transmission of low carbon electricity requires more copper per megawatt than conventional fossil fuel power plants. Offshore wind farms, for example, take around 11 tonnes of copper per megawatt to build—that is over 5 times as much as gas-fired power plants. Onshore wind and solar are also more copper-intensive, at around 1.7 and 1.4 times, respectively....Even if we could extract every ounce of copper in the ground in the coming decades, we could only replace 22% of our ageing fossil fuel energy system with an all electric one, then would be left wondering what to do with the remaining 78%…Trying to switch to “renewables” or building AI data centers so late in the game is thus not only technically infeasible but ill-advised, accelerating resource depletion even further and bringing about collapse even faster. Running on empty: Copper, 'The Honest Sorcerer, 7 December 2025

The inescapable fact is that whether we aim to increase energy consumption using fossil fuels or renewables means the continuing destruction of our environment. With renewables, we might see a small reduction in greenhouse gases emitted over a period of decades but, as the article excerpted above says, 'Copper mining is an extremely dirty, water intensive and polluting business. No wonder local communities are doing everything they can to avoid another mine being built next to their village....' Such trade-offs are implicit in most of our power generation choices and consumption choices. What is the policymaker to do? Current policy is heavily influenced by the short-term goals of politicians, and corporations and their lobbyists. In today's media, climate change is the most prominent environmental problem we face - and it is a huge problem. How do we weight small reductions in emissions of the gases that (probably) aggravate it, against the devastation wrought by, in this example, more copper mining and processing? 

We can't do so objectively. But what I suggest is that, instead of targeting the supposed means towards environmental goals, we come to some agreement about what those goals should be, and aim to achieve them. Thus Environmental Policy Bonds; an application of the Social Policy Bond idea to the environment, under which we'd agree on broad, long-term targets encompassing all aspects of the environment, contract out the achievement of these targets to investors bidding for the bonds, and reward investors as these targets are achieved. 

Targets must be broad, so that we do not achieve one environmental goal at the expense of another. So, for example, we target air pollution, rather than, say, nitrous oxide pollution; loss of biodiversity, rather than polar bears or pandas. 

The bonds imply humility, in the sense that they acknowledge that we don't know what future knowledge of scientific relationships will tell us. Take the seemingly simple question of disposable versus cloth nappies, which embodies in microcosm the difficulty of making policy about bigger concerns: there are always angles that we cannot foresee. Some years ago, a reader of the New Scientist wrote about nappies: 

.... I wonder whether the research comparing [cloth] to disposables took into account the fact that babies using cloth nappies tend to be toilet-trained day and night at a much earlier age – there is little more uncomfortable than a wet cloth nappy. A difference of six months to a year would lead to a child using 1100 to 2200 extra disposable diapers or nappies – a lot of extra landfill. Cleo Mussi, Letter to the editor of 'New Scientist', 12 December 2021

No government regulation, which uses science that is inherently fossilised, can account for the complexity of changing scientific relationships and our expanding knowledge thereof. An Environmental Policy Bond regime would supply market incentives to investors in the bonds to keep up their research and investigations and pursue only the most promising approaches to solving the targeted problem. The bonds would reward the sustained achievement of our goals, so that bond investors would be constantly researching and implementing only the most promising of the possible approaches to solving our problems, in ways that no government body can. 

For more about Social Policy Bonds see here. There are links there to papers on Environmental Policy Bonds and Climate Stability Bonds.  

The EU: "Regulations 'R' us"

The Economist writes:  

The EU’s latest big new rule is the Packaging and Packaging Waste Regulation ..., which came into force in August. Among other things, it will eventually ban single-use shampoo bottles used by hotels, and mini-sachets of ketchup or other condiments. However valuable its aspirations might be, much of it is, unfortunately, a bureaucratic mess. The EU’s new packaging rules are a bureaucratic bungle, the 'Economist', 24 September, 2026

It's unfortunate that the first instinct of our political class is to impose new regulations. Assuming that the EU has identified that there is a problem caused by too much waste, the policymaking system that they work within does not let them target a solution directly, but only to target what they think are likely causes of the problem - or those causes that they can legislate against. Even if they get it right, there's no guarantee that, by banning a small part of the problem, they won't create a bigger problem. Society is just too complex to try to identify root causes of problems, and then ban them. 

It's not just the EU, of course. Our policymaking systems evolved when society was less complex, and the sources of our problems were relatively easy to identify. In health, for instance, sanitation was an obviously desirable need. But the days when John Snow could trace a cholera epidemic in London to a polluted water pump have gone. Today’s health problems, as do most of our biggest and most urgent social and environmental problems, have many causes, known and unknown and constantly changing, as is our knowledge about them. So today’s policymakers can try to deal with, say, childhood obesity by pushing out dietary recommendations, taxing sugary drinks and encouraging sport or nominating a 'childhood obesity tsar’. Well-intended measures that could have some impact, but do not encourage people to search for solutions or approaches that lie beyond the expertise of policymakers or that threaten the livelihoods of their advisors. Politicians pick up the only tool available to them - a ban - and use that. 

My suggestion is that policymaking should focus not on the alleged means to certain ends, but on the ends themselves. It should, in consultation with the public, decide on which broad outcomes should be targeted and set up a system that rewards the people who achieve those outcomes. So, returning to the one-use shampoo and ketchup sachets; if the problem is one of too much waste, then an outcome-based policymaking body would target reductions of, say, 5 percent in the volume of waste created every year, and let motivated investors work out how best to achieve that reduction. 

It won't happen until we start thinking of policy in terms outcomes. Regulations about shampoo sachets could be imposed only in a policymaking system that pays lip service to outcomes, but can't relinquish control over how to achieve them. All governments think the same way, and we too, ordinary members of the public, are accustomed to the endless stream of rules, laws, and regulations emanating from our politicians. Any long-term  goals they do talk about are expressed only as vague aspirations that nobody really expects to be reached any time soon. The emphasis is on process and procedure; making sure that all the legislative boxes are ticked, and that failure to comply is punished. 

I think we should do better. If the goal is to improve the environment, we need to reward people who improve the environment; not impose regulations whose ostensible aim is to improve the environment, but that are unlikely to do so in any meaningful way. Social Policy Bonds are my suggestion: not only would they oblige us to think in terms of explicit and broad, societal goals; they would inject market incentives into their solution. Instead of meaningless micro-targets, their focus on outcomes would bring more public participation into the policymaking process: an end in itself, and a necessary condition for the buy-in that is  necessary when policies create losers as well as winners. 

For all my work on Social Policy Bonds see my website here. Within that site, for more about environmental applications of the idea see here. And for more about how the bonds would encourage more buy-in see here.  

Social Policy Bonds and prediction markets

Oliver Milman writes: 

In the US, big online prediction markets like Kalshi and Polymarket are considering a new area of growth beyond mere sport and crypto: the climate itself. Kalshi recently reported 500% growth in weather and climate wagers over the past year, taking the market to a $1.1bn, and is now partnering with the Weather Company, which owns the Weather Channel, to boost its credibility in this new arena. Would you bet on the future of our planet?, Oliver Milman, the Guardian, 25 September 2026

In these prediction markets there are counterparties to the bets that people make so that, with some people hoping to see a reduction in the rate of climate change, there are others who will lose out if that happens. That, of course, differs from my conception of Social Policy Bonds, for which there is no such counterparty; rather the 'bettors' (actually, investors in the bonds) are aiming to benefit from a large sum of money, held in escrow, and paid out only when whatever social or environmental goal has been achieved. This sum could be made up of contributions from supranational bodies, national governments, corporations, philanthropists and the public, or some combination. So, rather than sit back and hope their forecasts about, in this example, the climate, prove correct, the investors in Climate Stability Bonds would have incentives to actually do something about achieving our climate goal. It is the difference between what investors pay for the bonds, and the redemption value of the bonds that motivates investors to help achieve the targeted goal. Rather than being passive holders of, essentially, a betting slip, as in prediction markets, a Social Policy Bond regime would turn bondholders into active investors, working to achieve socially desirable outcomes. 

Price signalling

There is one feature common to prediction markets and Social Policy Bonds: the useful information that markets generate. As Mr Milman writes:

A Kalshi spokesperson told me the company sees itself as part of “well-calibrated forecasting data” – essentially using the wisdom of the market to help predict how hot it will get, how bad floods will become and other such environmental outcomes.

The value of Social Policy Bonds would rise and fall, depending on how close potential investors think the goal they target is to being achieved. Their value could rise owing to holders' efforts to achieve the goal or because of events beyond holders' control. So, if Climate Stability Bonds are issued, and new research finds that the climate is changing more rapidly than people thought, then their value would fall. Factors other than those related to climate - interest rates - for example, would also affect the bonds' value. The market value of the bonds, and their changes over time, would be of great interest to policymakers. I write in more detail about this price signalling in Chapter 5 of my book, Market Solutions for Social and Environmental Problems, the text of which can be downloaded for no charge. 

Key criteria for a Social Policy Bond regime

We're a long way from the days of John Snow, who successfully traced the origin of a serious health problem - a cholera outbreak in London - to a single public water pump. Many of today's most urgent social and environmental problems have multiple causes and are beset by time lags, which makes it difficult to identify how best to solve them. One example: childhood obesity; it's just not amenable to the sort of painstaking analysis done by a single person, however brilliant. Policy today is generally a top-down, one-size-fits-all business, heavily influenced by powerful interest groups, within and outside government. As such, it is, in my view, incapable of dealing with our complex social problems effectively. A Social Policy Bond regime is my suggested way of encouraging people to research, experiment and refine the (most probably) multiple approaches to solving our problems. So: complexity is one attribute of a problem that's best addressed by Social Policy Bonds. Others are:

•         The problem can be solved only in the long term;
•       Existing policies are failing;
•          Diverse, adaptive approaches are going to be necessary;
•         Financial rewards to those involved in achieving objectives are uncorrelated to their effectiveness in doing so; and 
•      Progress toward solving the problem can be readily and objectively monitored.

Many social and environmental problems satisfy these criteria including, at the global level: conflict (war and all forms of political violence) and climate change; and at the national level: crime, unemployment and air and water quality. Other national goals that could be targeted for improvements are literacy, employment and health. I've discussed applications of the Social Policy Bond idea to all these problems, and more, on the SocialGoals.com website.

Closing the gap

This is the first section of a longer piece intended for publication. It will be followed by sections on: the need to express policy in terms of outcomes; and Social Policy Bonds

The gap between politicians and public 

There’s a large and growing gap between politicians and the people they are supposed to represent. This has always been true in autocratic countries, but it is now also a feature of democracies. I believe this stems from the increasingly opaque ways in which government works, such that the only people who can follow policymaking closely are politicians themselves, lawyers, well-off corporations or their lobbyists. Our policymaking process is so obscure, so unknowable by ordinary people that the alienation between politicians the public is inevitable. Whether this is intentional or not, is not the point; more important is that no politician wants to make it more transparent. Such a system is ripe for gaming and manipulation, but even when working according to the letter of the law, it inherently favours those who have the time and inclination to involve themselves - or their paid agents - in the minutiae of the policymaking process. Any link between what politicians say, and what ordinary people actually experience is undetectable.
Knowing this, we are reduced to choosing our representatives on the bases of their campaign promises, looks, ability to produce superficially convincing soundbites or, perhaps most portentous of all: identity. That is, those of the electorate who can be bothered to turn out to vote; the rest of us have taken on the learned helplessness that is characteristic of subjects that come to believe that their lives can neither be improved nor avoided. The result is clear, even in democracies: disenchantment with our leaders, mistrust and cynicism, and the disturbing drift toward authoritarianism and demagoguery.

I believe this his happening because our policymaking system focuses on concerns that have little obvious relevance to members of the public: institutional structures and funding arrangements, law changes, and macroeconomic abstractions. Oracular pronouncements of lofty goals are sometimes heard, but nothing can be pinned down and nobody takes them seriously. It is almost as if political systems the world over, whatever their origins, ere purposely designed to alienate the public. It’s hardly surprising then that there’s a strong demand for the sort of sloganeering that is often inflammatory and dishonest, but does at least express ordinary people’s concerns in language we can understand. 

The system’s complexity makes it difficult to share policy decisions and dilemmas with non-members of the political caste. As with any profession, as specialisation increases, so does the difficulty of communicating with the public. This matters more with politics than other professions with politicians, because their decisions affect all of us. The mistrust is mutual and self-perpetuating, so that now the most fundamental notion of policymaking - that all policy choices will create winners and losers - is never communicated to the public, because we’d see it as a lie or a self-serving admission of incompetence. We don’t trust politicians, we don’t understand their language, so why should they bother us with unpalatable truths? 

It’s essential, I believe, to close the trust gap, mainly because doing so would increase our buy-in to the policy decisions made on our behalf. The trust gap would narrow if people other than politicians, wealthy corporations and lobbyists could follow and have some say in the policymaking process. But the policymaking system’s opacity and complexity make it unattractive to people who work outside it. And one big reason for that, I believe, is that policy is formulated in terms that are of little interest to non-specialists. 

What money can't buy

The implicit target of almost all policymaking is to maximise either national income, expressed as GDP, or things that national income can buy. The weaknesses of GDP as an indicator of societal well-being are well documented. A huge flaw is that it fails to capture contributions to well-being for which there is no market. Hence:

No less fundamental than its source, then, are questions of the quantity of energy consumed, the ways in which it is distributed, and the purposes it serves. This issue of quantity versus quality has largely been ignored in mainstream environmental discourses — partly because the imperative to reduce total energy usage solicits [sic] no tech-driven solutions that money can buy. Not cool, Mireille Roddier, 'Places', September 2026

And:

Defensive medicine can be simply defined as medical responses undertaken to avoid liability rather than to benefit the patient. Billions for Defense: The Pervasive Nature of Defensive Medicine, Richard E Anderson, The Doctors Company, November 1999

In both cases the market fails society. In the first case by encouraging energy consumption that is excessive, in that environmental costs aren't captured by the market and so borne by society. In the second, the costs of excessive screening and treatment are similarly borne by society. 

A Social Policy Bond regime could reduce the costs to society of these market failures; it would do so by explicitly identifying our goals, and rewarding people for achieving them. A vital first step is to be explicit about exactly what we want to achieve. So, if energy consumption itself is seen as undesirable, we could reward those bring about its reduction. More likely, it's the environmental costs of energy consumption that we regard as problematic, and applying the Social Policy Bond idea to the environment would achieve that goal. 

Similarly, defensive medicine occurs because we do not explicitly target or reward improvements in society's health; mostly we reward medical interventions, and so incentivise their excessive use. Applying the Social Policy Bond idea to health would help solve this problem. A government could issue Tradeable Health Outcome Bonds, targeting an array of health indicators, each of which would have to fall within an approved range for a sustained period before the bonds would be redeemed. 

Social Policy Bonds express policy goals in terms of outcomes, rather than the alleged, and often very indirect, means of achieving them. Their aim is to encourage people to research, experiment and refine diverse, adaptive approaches to solving our long-term social and environmental problems; many of which are hugely important, but have been neglected because markets don't or can't address them. 

Risk aversion rules

The Economist writes about India: 

Bureaucracy runs on risk aversion. Officials worried about anti-corruption bodies award contracts to the lowest bidder, despite having the discretion to weigh up other factors. They splurge on top-tier consultants because it gives them cover for their decisions. A bureaucrat who takes a risk and produces a terrific outcome gets no reward. Why can't India's government build a decent website?, the 'Economist', 28 June 2026

Not much has changed since I began advocating Social Policy Bonds as a means of targeting outcomes. Politicians focus on institutional structures and funding. Bureaucracy, in India and elsewhere, prioritises process. Meantime public political debate is taken up with public images, sound bites, vague promises and identity. The result is government that is inefficient and ineffective, in that it prioritises narrow, short-term goals, while refusing to address urgent, long-term challenges such as budget deficits, environmental depredations, health and violent political conflict. One result is that the gap between government and people is widening in countries democratic or not, the world over.

The gap would narrow if more people participated in policymaking. One reason, I believe, why we're not very interested is that policy is formulated in terms that are difficult to relate to outcomes that are meaningful to natural persons, as distinct from corporate bodies. Policymakers appear to concern themselves with decisions about funding for different government agencies, dispensing patronage to big business and other lobbies, presenting themselves in the best light ... almost anything, in fact, except outcomes that mean something to real people.

A government that issued Social Policy Bonds would, from the outset, have to concern itself with social and environmental outcomes. Its main role would be to articulate society's wishes regarding social and environmental outcomes, and to raise the revenue that would fund these outcomes. Unlike most of the current determinants of policy, the language of outcomes and the necessary trade-offs between them is comprehensible to people other than politicians, bureaucrats, lawyers and public relations experts. For that reason, more people would be drawn into policymaking - an end in itself, as well as a means toward getting greater public buy-in to the resulting policies.

Expressing policy in terms of outcomes, and the consequent closing of the gap between public and policymakers would be one valuable benefit arising from a Social Policy Bond regime. The other would be the much greater efficiency in achieving social and environmental goals once the market, rather than a handful of politicians, decides who shall achieve these goals, and how they shall be achieved. 

 

World Peace Bonds - a guide for philanthropists

 This article was commissioned by Billionaire. I am uncertain as to whether it's been published

Incentives for peace: World Peace Bonds

World Peace Bonds are a way in which the market’s incentives and efficiencies can be channelled to those people who are most successful at reducing conflict. Philanthropists could get the ball rolling by contributing to a fund that would be used to redeem non-interest-bearing bonds only when world peace had been achieved and sustained for, say, thirty years. The aim is to encourage diverse and adaptive approaches to reducing or eliminating wars and civil wars. The bonds would reward the achievement of the peace goal, regardless of who achieves it or how they do so. The redemption fund could be swelled by philanthropists’ undertaking to match donations from others, including NGOs and the public.

The bonds would be issued on the open market. They’d fetch a fraction of their redemption value, because the peace goal is necessarily remote. But the bonds would be tradeable; their value would rise and fall as the market sees achievement of peace as more or less likely. Investors in the bonds wouldn’t have to wait for the bonds to be redeemed before benefiting from holding them: they’d do what they could to achieve peace, see their bonds rise in value, and then sell their bonds to those best placed to take the next steps. The bonds would always be in the hands of those who think they can do best to advance the peace goal quickly and at least cost. They’d form a tacit coalition, of variable composition, with the sole aim of maximising the reduction of conflict per unit outlay.

A long-term perspective, sadly missing from many of today’s peace-building activities, is essential. A lasting peace is more likely to be a just peace; the ceasefires and truces of today do little more than allow bad actors to inflame resentment and re-arm. Investors, knowing that sustained peace will be rewarded, would research, experiment and refine their peace-building initiatives, would concentrate on the most promising of these, and – something that doesn’t always happen today – would terminate those that achieve little.

The long-term outlook would encourage a wider range of peace-building initiatives than those that even well-meaning politicians undertake today. Investors in World Peace Bonds could lobby or work with governments to, say, change and enforce laws that make wars at home or overseas a less likely prospect. They could finance sports matches between potential protagonists, promote anti-war programmes on TV, or set up exchange schemes for students and schoolchildren. They could try to cajole the financial supporters of conflict into redirecting their funds along more edifying lines. They could offer poor countries different forms of aid, including education and scientific aid, and measures aimed at enlightening populations. They could co-opt, bribe, coerce or otherwise undermine those who foment conflict. They could facilitate liaisons between people of all ages of different ethnic or religious groups. The crucial point is that bondholders have more freedom and incentive to explore and carry out such diverse initiatives than governments or other international bodies, and more incentive to focus only on those that most promising.

Of course, there are many hard-working employees of existing public- and private-sector organisations who are already trying to achieve peace. But they typically have little funding or are not paid by results. Investors in World Peace Bonds would reward the most efficient of these bodies, allowing them not just to raise the salaries of their existing employees, but also to attract more expertise and more resources.

Powerful people in governments, religious institutions or militant organisations might resent the targeting of such objectives by external agencies in this way. They might not be swayed by bondholders’ efforts to influence them – but many of their followers will be. As well, under a World Peace Bond regime they would have to openly declare their opposition to peace itself. It is precisely this focus on the outcome of peace -- rather than activities or institutions -- that would help mobilise and strengthen the coalition working to achieve it.

Humankind’s ingenuity is boundless but too much of it, reacting rationally to the incentives currently on offer, is channelled into such socially dubious activities as advertising dogfood or – God help us! – technical analysis. Actually, it’s worse than that: the incentives now are for those few who have acquired power – including psychopaths, kleptocrats and fanatics - to do whatever they can to retain and extend it, and if that means they must inflame conflict then they will do that. The result is the world we see today: a world wherein sixty major armed conflicts rage; killing, maiming, starving and making millions homeless. And all the while there looms the possibility of nuclear catastrophe.

In such a world, the wishes of the billions of people who don’t want to live in a world of conflict are too diffuse to prevail, and we cannot rely on politicians anywhere to change that. World Peace Bonds would bypass politicians and, by appealing to investors’ self-interest, could bring about the humankind’s most yearned for, but most elusive goal: the permanent elimination of armed conflict.

For more on applications of the concept, please see http://SocialGoals.com.

© Ronnie Horesh April 2026

Sleepwalking into nuclear war

 Antiwar.com describes the US military's latest brainwave: 

The Pentagon is reportedly drafting a new nuclear strategy that’s expected to emphasize the use of tactical nuclear weapons to give the president more “options” in a potential nuclear conflict. The strategy... is being drafted by the Pentagon’s policy chief, Elbridge Colby, who has for more than a decade called for the US to develop additional capabilities to fight a “limited nuclear war.” The idea would be to shift the US nuclear strategy away from the focus on using strategic nuclear weapons to wipe out an adversary’s nuclear capabilities and focus more on the possibility of using smaller, tactical nuclear weapons in a “regional” conflict. Pentagon drafting new nuclear strategy..., Dave DeCamp, Anti-war.com, 9 August 2026

The logic is impeccable; each step can be fully explained by invoking the current situation and fears about what others might do. But the stakes now are impossibly high. It's surely worth trying something more radical than the processes that have led us to the brink of catastrophe. 

There are good, hardworking people working for organisations that have as their ostensible aim the ending of conflict at all levels: global, regional and local. But those best placed to know reckon we are closer than ever to nuclear conflict. The Pentagon's new strategy could take us even closer. We need to do things differently. 

Nuclear Peace Bonds could help halt the drift towards nuclear conflict, by putting in place a system that encourages and rewards people for researching, implementing and refining the most promising of such alternative approaches. The would inject the market's incentives and efficiencies into the achievement of nuclear peace, sustained for a period of at least thirty years. 'Nuclear peace' could be defined as a period during which the number of people killed within 24 hours by the detonation of a nuclear device is less than (say) 500. The bonds would reward those who achieve such a sustained period of nuclear peace, whoever they are and however they do so: only the outcome would be stipulated. 

As well as pursuing activities the exact nature of which we cannot anticipate, investors in Nuclear Peace Bonds could do things that cannot be done by existing organisations, constrained as they are by precedent, and their perceived need to maintain their existence and so satisfy the bodies that fund them. So, for example, in today's world, nobody would have any incentive to bribe people close to decision makers in politics or the military to advocate nuclear disarmament. Likewise, an existing body is unlikely to try to get religious extremists to tone down their rhetoric or take up golf, even if it believed that were the most efficient way of reducing the probability of nuclear conflict. The risk and consequences of exposure and backlash are too great for current institutions to bear. Holders of Nuclear Peace Bonds, however, would not be deterred from whatever actions they think most effective: funds to redeem their bonds could be held in escrow. Once nuclear peace had been achieved and sustained, their reward would be guaranteed. 

Investors in the bonds could operate in parallel with existing bodies. They might decide that some of their activities are worthwhile and channel more funding into the most promising of these. Or, as with the bribery example, they could pursue radically different approaches. The main point is that all the investors decisions would be entirely directed to sustaining nuclear peace at least cost. Their goal would be exactly congruent with society's, and their funding would attract resources and expertise away from some  well-rewarded activities of little social merit. Advertising dog-food or writing algorithms for high-frequency share trading are two examples; there are many others. 

The Social Policy Bond concept, of which Nuclear Peace Bonds are on application hasn't gone very far in the decades since I came up with it. A non-tradable version is now in use in about 25 countries, but it's inherently limited as a means for achieving long-term goals, for reasons that I've explained here and here. I still hope that my original concept will be deployed, as I don't think we are currently on track to meet such huge and urgent challenges as nuclear conflict.