One reason why Social Policy Bonds haven't been implemented, in contrast to their non-tradable variant, is that it's difficult to experiment with them. To stand a chance of being implemented in preference to more-conventional policies, Social Policy bonds have to be shown to have been successful where other policies have failed. But the criteria for bonds' being an improvement over policy alternatives militate against small-scale trials. Social Policy Bonds will work best when:
- We have no real idea how to solve the problem;
- One or a combination of diverse methods need to be tried, refined and implemented, with resources being transferred from failed or inefficient approaches to more promising ones;
- The bonds must not simply transfer problem from one area (geographic or otherwise) to another;
- Goals must be robustly and verifiably quantifiable at low cost; and
- The time-scale must be long enough to enable objective-achievers to enter and leave the coalition of bondholders.
Social Policy Bonds can work s for things like climate change, improving health, reducing crime (in a country or large region: we don't want crims simply to travel a few miles). But none of these objectives lends itself to experiment. Nevertheless, there is a class of projects that the bonds could target at no risk: achieving those goals that have eluded policymakers, or indeed anyone and that, partly for that reason, receives resources that are minute in comparison to the benefits that achievement would bring. Such goals could include the ending of all violent political conflict, nuclear peace, and disaster prevention - which would include adequate protection against disasters that are foreseeable (like the current pandemic), and unforseeable. These are goals that humanity as a whole would like to see reached, but that do not attract the funding that their achievement requires. Apart from the inescapable inability to conduct trials, the benefits of achieving these goals are too diffuse and long term to influence politicians or corporations. We need sources of funds that are wealthy, willing to take a chance on a new financial instrument, and willing to relinquish the power to dictate exactly who benefits from their largesse. Step forward, public-spirited philanthropists: humanity is waiting for you.