Outcomes and metrics

A Social Policy Bond regime would mean focusing entirely on outcomes. Apart from other advantages, this means that the range of indicators of success or failure can be expanded. Currently, a government that wants to reduce cocaine consumption has to rely on pretty dodgy figures to monitor how well its policy is doing. Its indicators will tend to be derived from current institutional structures. Its metrics for cocaine consumption, for instance, currently include seizures by customs, or the numbers of people requiring hospitalisation or dying from their addiction. These have obvious flaws.

A story in today's [London] Times shows how much more versatile in its choice of indicators a Social Policy Bond regime could be. Scientists in Italy can measure the extent of cocaine abuse by measuring the concentration of a metabolic by-product, benzoylecgonine in the Po river basin. "[T]he Po carries the equivalent of about 4kg of the drug a day, with a street value of about £20,000. ... [F]or every 1000 young adults in the catchment area, about 30 must be taking a daily dose of 100 milligrams of cocaine, which greatly exceeds official national figures for cocaine use." ('Where rivers run high on cocaine'.)

Focusing on outcomes makes it easier to target such indicators, which are more strictly correlated with policy targets. Unfortunately, in today's policy environment, policymakers target indicators for reasons unconnected with their usefulness. So Kyoto targets not the stability of the climate, nor even the composition of the atmosphere, nor even emissions of greenhouse gases, but anthropogenic emissions of those gases that were thought to be greenhouse gases in the 1990s. A Climate Stability Bond regime would be different, because it would reward people for achieving what we actually want to achieve: a more stable climate. It could include such indicators as insurance payouts for adverse climatic events, variations in temperature, the sea level at various locations etc. All of these would be more closely related to society's goal than the alleged causes of climate change.