Climate change: humility recommended

The Economist, in a long article about the US state of Louisiana's coastal erosion problem (much of which is caused by factors other than climate change) says:

The state’s impressive coastal policy illustrates America’s ability to adapt to a natural disaster that is already upon it. It does not seem to have nudged the state, or the Republican Party, any closer to policies that might slow the warming that is contributing to that disaster. (My emphasis) Louisiana fights the sea, and loses, the 'Economist' 26 August

I approve of the tentativeness implied by 'might', and it's good to see others implicitly question whether stopping greenhouse gas emissions is the best way of achieving whatever are our goals concerning the climate. I would argue that the fundamental question we should be asking ourselves is:

Are we more concerned about climate change, or about the impacts of climate change on human, animal and plant life?

Accepting that there is a climate change problem, and that anthropogenic greenhouse gases are responsible (to an uncertain degree) for it, we need, I think, to challenge the pervasive assumption that the most efficient way of mitigating its negative impacts is to reduce those same greenhouse gas emissions. With the word 'might', the Economist would seem to agree.

A Social Policy Bond regime would specify very clearly what we want to achieve. 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. We shall 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 and imposing extremely high upfront costs, will not.

What exactly is the problem?

'When greenbacks are on offer, American schoolchildren seem to try harder': the Economist discusses how financial incentives can change test results:

[R]esearchers conducted an experiment in secondary schools in Shanghai and America. In each place pupils were split into two groups. The first answered 25 maths questions that had appeared in PISA. The second took the same test, but before the pupils did so, they were presented with an envelope with 25 dollar bills or the equivalent in yuan. The teens were told that for every wrong answer they would be docked a dollar. [The researchers] found that the ploy boosted scores among American students relative to their compatriots without a cash incentive, but not among the Chinese ones. Effort, not ability, may explain the gap between American and Chinese pupils, 'the Economist', 19 August. PISA is the Programme for International Student Assessment

The boost was significant: 'According to some rough calculations, if extrapolated to the main PISA test, the improvement in performance would have moved America from 36th to 19th in the ranking [of 69 countries], in which Shanghai came top.' It's an interesting result, and one that should make us question what the tests are trying to measure, and whether there are wider policy implications.

Test scores will most likely continue to play a big role in determining policy and the allocation of resources in education. That would be true whether or not we issue Social Policy Bonds that aim to achieve, say, universal literacy. So, in the light of the research results summarised above, should we offer cash incentives to pupils about to take literacy tests?

I'm inclined to think not, at least when it comes to measuring basic literacy. One reason is that motivation, or the lack of it, are significant in themselves. If children of school age find a basic reading test too burdensome to pass without a financial incentive, then that in itself can  be seen as a problem that needs to be solved. The nature of that problem might be a general cultural one, or one that's specific to certain classes of pupil. We might even interpret the difference between performance with a financial incentive and without as a social problem; and aim to narrow it.

There's no definitive answer though. Much depends on how we're going to use test scores, and whether there are other indicators that can usefully be targeted at the same time. As a society, we do need to think carefully about what we are trying to achieve. 'Teaching to the test' is problematic in itself and, while I do think universal literacy and numeracy are valid goals in themselves, and not very susceptible to the effects described above, we might do better to target for reduction as well as, or instead of, illiteracy, the social problems of unemployment and poverty.

Incentives and health

Dr James DiNicolantonio writes about the influence of the sugar industry on nutritional guidelines:

Throughout the years, the effects of conflicts of interest with the sugar industry were never quantified, until a recent systematic review of systematic reviews was published in 2013 in the journal PLOS Medicine. The review found that in studies with a conflict of interest with the food industry, 83.3 percent found no evidence linking sugar-sweetened beverages with weight gain/obesity. In contrast, when only studies without conflicts of interest with the food industry were analyzed, the same percentage (83.3 percent) found a positive association—that sugar-sweetened beverages have a definitive connection with weight gain and obesity. This one study provides just a small glimpse of how much science has likely been affected by these types of influences. The Salt Fix: Why the Experts Got it All Wrong and How Eating More Might Save Your Life, Dr. James DiNicolantonio, June 2017

Nothing particularly new, but we do need reminding of the importance of incentives even on hard-working, well-meaning, highly talented members of the medical profession. Of course, financial incentives can reinforce public health as well as degrade it. The Social Policy Bond concept, as applied to health, would align our national health goals with rewards to those who are efficient at achieving them. It's unfortunate that, under our current healthcare systems, there is little to encourage people to seek out those ways of improving our health at least cost. Medical specialists, expert in their field, advocate effectively for their share of limited resources, but the overall health of the nation isn't effectively targeted. Few people have any financial incentive to consider it, and especially not to question the current ways in which funding is allocated.

Health Bonds would be different. They would target our broad health goals, probably in the form of a range of indicators such as longevity and Quality Adjusted Life Years. For the bonds to be redeemed, each indicator would have to fall into a specified range, representing an improvement over the current level. Significant improvements in a nation's health will probably take decades to achieve, but Health Bonds would be tradeable, meaning that any coalition of interests who improve our health, however marginally, can profit from their doing so by virtue of the increased value of their bondholding. By backing and issuing Health Bonds, a government could effectively maximise the health gains per tax dollar spent without having to specify how such gains shall be achieved, nor who shall achieve them. Opportunities for the sort of corruption (whether deliberate or not) hinted at by Dr DiNicolantonio and the authors of the paper he cites, would disappear, to be replaced by a healthcare system in which the interests of practitioners and population would be entirely congruent.

Health: too important to be left to the healthcare industry

Brian Nelson writes: 

That our payment incentives have had the unintended consequence of often harming patients has been recognized by payers (government included) and efforts are underway to change. Can we devise a system that pays for outcomes rather than paying for services regardless of effectiveness? Unless we do, I fear things will not change. A review by Brian W Nelson (orthopaedic surgeon), of Crooked: Outwitting the Back Pain Industry and Getting on the Road to Recovery, 21 May

There's an idea: pay for favourable health outcomes, rather than activities or institutions purporting to deliver those outcomes, but at least as concerned for their own well-being as those of the people they are supposed to be helping. We see this not only in orthopaedics, but in other areas of physical and mental health. There's nothing particularly startling about this: practitioners have their own families to support, and are reacting perfectly rationally to the incentives on offer. And those incentives encourage over-screening and over-treatment, and the neglect of commercially nonnviable preventive interventions. As the British Medical Association puts it, in a recent paper:

Despite the clear acknowledgement across the UK of the need to prioritise ill-health prevention and public health activities, the data analysed in this briefing show this is not matched by funding commitments. Funding for ill-health prevention and public health in the UK (pdf), British Medical Association, 2017

It's the same, or worse, in the US:

Almost 1.3 million people went to U.S. emergency rooms due to adverse drug effects in 2014, and about 124,000 people died from those events. [R]research suggests that up to half of those events were preventable. ... An estimated $200 billion per year is spent in the U.S. on the unnecessary and improper use of medication, for the drugs themselves and related medical costs.... Too many meds?, Teresa Carr, 'Consumers Reports', dated September 2017

It's time for a new approach. My suggestion is that rather than policymakers' focusing on the means by which they think good health can be achieved, they instead focus on targets for good physical and mental health, and provide incentives for people to achieve those targets. The Social Policy Bond concept, applied to health, would do this, and more: it would inject the market's incentives and efficiencies into all the processes necessary to improve a nation's health. Health Bonds would channel our scarce resources into the most efficient means of improving our health, including those currently neglected or not even considered by our current healthcare bodies, most of which have little incentive or capacity to consider broad health outcomes that fall outside their increasingly specialised remit.

Health Bonds wouldn't stipulate how our health goals shall be achieved, nor who shall achieve them. This allows a broader approach. For example: our current compartmentalised accountancy-driven policy approach would not take into consideration the adverse health impacts of subsidising advanced courses for young drivers of motorbikes or cars. But holders of Health Bonds would look at such measures, investigate their possible health impacts, and make an informed decision as to whether any improvement they might bring to the nation's health is worthwhile, compared to other possible interventions.