14 September 2010

What drives policy?

Sometimes rationality takes a back seat:
Based on surveys ...the top five worries of parents are, in order:

1. Kidnapping
2. School snipers
3. Terrorists
4. Dangerous strangers
5. Drugs

But how do children really get hurt or killed?

1. Car accidents
2. Homicide (usually committed by a person who knows the child, not a stranger)
3. Abuse
4. Suicide
5. Drowning

Quoted by Bruce Schneier, orignally from NPR
Unfortunately, policy is often made on the basis of public perception, rather than a cool, rational appraisal of the facts. It's a widespread problem:

…policies are often adopted on the basis of less careful analysis than their importance warrants, leaving wide room for mistakes and misperceptions. Forces of knowledge destruction are often stronger than those favoring knowledge creation. Hence states have an inherent tendency toward primitive thought, and the conduct of public affairs is often polluted by myth, misinformation, and flimsy analysis. Source (pdf)

Social Policy Bonds could make a difference here. We react to events impulsively and irrationally but we do so for a reason: generally, to return to the status quo ante. Often, in our irrationality, we overreact. 'Too much, too late', is the common, and destructive, impulse. A bond regime, in contrast, would supply incentives to achieve the same goal, but more rationally. So, for instance, if our goal is to minimize the dangers to children, we could issue Social Policy Bonds that would aim to reduce the numbers of people dying or suffering serious injury, from any cause, before the age of 18. This goal would be stable over time, despite events that in today's environment would sway politicians and lead to irrational policy. But at the same time, investors in the bonds would have incentives to react rationally and efficiently to genuine changes in the number and severity of threats to children.

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