Complexity

James C Scott writes:  

[T]he very strength of scientific agricultural experimentation— its simplifying assumptions and its ability to isolate the impact of a single variable on total production—is incapable of dealing adequately with certain forms of complexity. It tends to ignore, or discount, agricultural practices that are not assimilable to its techniques. James C Scott, Seeing Like a State, (Chapter 8), 1998

As in agriculture, so with society and the environment. Society is too complex for simplistic goals, such as maximising food production, necessarily to improve net societal well-being. We'd do better to target the outcomes we wish to see, rather than the supposed means of getting there. In a Social Policy Bond regime, we might ignore 'agricultural policy' (notoriously inefficient and corrupt) and explicitly target broader goals as the physical health of the population. Subsidising farmers might be one way of getting there, but it would be up to bondholders to work out whether there are more efficient ways of achieving that goal. (There probably are.) Societal complexity has risen hugely since relatively simple goals and policies could adequately anticipate all its variables and time lags, and their effects on well-being. 

Social Policy Bonds would target the outcomes we wish to see, rather than the alleged means of reaching them. As well as efficiency and transparency about what government is trying to achieve, other advantages of a bond regime would arise from its ability to target long-term goals, and so encourage research, experimentation and refinement of a diverse and adaptive array of approaches to solutions to our social and environmental problems. Though the concept has been in the public arena for decades, it  hasn't advanced very far. I think this is partly because the left doesn't like anything to do with markets and elements of the right doesn't want to think in terms of government intervention of any sort (though a bond regime would shrink the role of politicians). Most institutions of any sort, public- or private-sector, are mainly concerned with self-perpetuation, and would fell threatened by Social Policy Bonds, which would prioritise efficiency most of all.