A relatively good year for Social Policy Bonds. There has been some interest in the novel concept of paying-for-results in social policy through the concept of Social Impact Bonds (a watered-down version of Social Policy Bonds). In April Professor Robert Shiller of Yale University suggest Social Policy Bonds as one of his Ten Ways Finance Can Be a Force for Good in Society. This was taken up here, for instance, and, in oral form, here, and has generated more views of this blog and my home site and some email correspondence.
One reason why no Social Policy Bonds have yet been issued is that their advantages over conventional policy are most marked on a large scale and for long-term or ambitious objectives. For such goals, diverse, adaptive approaches need to be researched, tried on a small scale, refined and implemented. The bonds, being tradeable, allow for and encourage such experimentation. There are few other ways of supplying explicit, transparent and stable incentives to bring about world peace, for instance, or to mitigate natural or man-made disasters. National goals, too, are amenable to a Social Policy Bond approach. Reducing crime, for instance, or improving health are goals that require multiple, adaptive solutions, rather than the one-size-fits-all, top down, reactive or fossilized approach characteristic of our current efforts.
For all such goals, people need to be motivated to shift resources, keep their eyes on the long term (though with incentives to achieve success in the short term) and, crucially, terminate failed approaches. For smaller goals, where relationships between cause and effect are readily identified and acted upon, conventional policy, if the incentives are right, can work. Social Policy Bonds issued on a trial basis to achieve such goals might just see problems exported to areas outside the bondholders' remit. But for national or global goals, which mean dealing with vastly complex linkages and time lags, Social Policy Bonds, I am convinced, are the way forward.
One reason why no Social Policy Bonds have yet been issued is that their advantages over conventional policy are most marked on a large scale and for long-term or ambitious objectives. For such goals, diverse, adaptive approaches need to be researched, tried on a small scale, refined and implemented. The bonds, being tradeable, allow for and encourage such experimentation. There are few other ways of supplying explicit, transparent and stable incentives to bring about world peace, for instance, or to mitigate natural or man-made disasters. National goals, too, are amenable to a Social Policy Bond approach. Reducing crime, for instance, or improving health are goals that require multiple, adaptive solutions, rather than the one-size-fits-all, top down, reactive or fossilized approach characteristic of our current efforts.
For all such goals, people need to be motivated to shift resources, keep their eyes on the long term (though with incentives to achieve success in the short term) and, crucially, terminate failed approaches. For smaller goals, where relationships between cause and effect are readily identified and acted upon, conventional policy, if the incentives are right, can work. Social Policy Bonds issued on a trial basis to achieve such goals might just see problems exported to areas outside the bondholders' remit. But for national or global goals, which mean dealing with vastly complex linkages and time lags, Social Policy Bonds, I am convinced, are the way forward.
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