New concepts in Mickey Mouse micro-targets

What determines the targets that our governments aim at? Something that sounds good? Something that they're already measuring? Something that they know they can easily achieve without doing anything? One thing's clear: whether the goal is big (GDP, net immigration, inflation) or small (waiting times at hospitals), the goals chosen have nothing to do with the well-being of the citizens our governments are supposed to represent.Two examples recently cited:

Fifteen years ago police in Hokkaido, in Japan’s sparsely populated north, conspired with yakuza gangsters to smuggle guns into the country so they could meet quotas for finding them. As crime dries up, Japan’s police hunt for things to do, 'the Economist, dated 20 May

Some road space rationing scheme have had perverse knock-on effects. According to some reports, people in Mexico and Beijing have started buying second vehicles with different licence plates to get around restrictions. Often the second car will be cheap and more polluting. Cutting through the smog: What to do to fight air pollution, Nic Fleming, 'New Scientist', 3 May

In our complex societies quantitative targets are probably necessary. But these targets need to be both meaningful to ordinary people and inextricably linked to, improvements in well-being. The alternative to such indicators are the sort of Mickey Mouse micro-targets, like those above, that actually conflict with societal well-being. Social Policy Bonds would clarify what exactly as a society we want to believe. Targets would be the subject of debate in which the public can participate. They'd be broad and relevant, comprehensible and explicit. Targets are too important to be left to the interests of those with an interest in keeping them narrow, short term and irrelevant (at best) to the nation's well-being.

Alternative data and metrics for a bond regime

The Economist writes about 'alternative data':

The growth of small, low-cost satellites and machine learning means companies can quickly and cheaply parse millions of satellite images a day. A common trick is to analyse photos of car parks outside big-box retailers such as Walmart to get a sense of daily revenues. A Chicago-based data firm, RS Metrics, sells estimates on the productivity of factories by tracking the number of lorries parked outside. The watchers, the 'Economist', 20 August

Mindful of Campbell's Law, I've always thought that each Social Policy Bond issue should target a set of metrics, each of which has to fall within a specified range before the bonds can be redeemed. Also, that, if we target a broad national goal (universal literacy, say) the bond's issuers could stipulate that the bonds would be redeemed on the basis of data from a random sample of people of the country, so as to minimize the risks of manipulation. Alternative data could contribute to robust combinations of metrics for the purposes of a bond regime, especially those covering countries where official data is scarce or unreliable. As the article says: "Investors are particularly keen for firms to study pictures that yield rare data on, say, steel production in China or Russia, where official data can be patchy." It's not difficult to imagine scenarios in which alternative data could play a possibly indispensable role in the monitoring of progress toward environmental goals, or goals such as disaster prevention or conflict reduction.

Metrics for World Peace Bonds

Metrics for World Peace Bonds, or: Why Long-term Goals are Best

Pondering the best metrics for peace, I came to think that with a goal for peace sustained over fifty or more years, metrics that target for elimination the use of deadly violence become more closely aligned with what we actually want to achieve. By this I mean that, with a decades-long goal, bondholders would have incentives not merely to prevent the outbreak of violence, but also to prevent the precursors to violence. From the point of view of the backers and issuers of World Peace Bonds this makes the metric of deadly violence more robust.

For example: the Cold War ended peacefully, but if World Peace Bonds issued in the year 1950 had targeted a period of sustained peace of just ten years then bondholders would have profited, despite the accumulation of ever more horrific atomic and nuclear weapons, during the period that preceded the Cuban Missile Crisis of October 1962. If the same bonds had been issued with a target of fifty years of sustained peace, then bondholders would have been motivated to reduce tensions, including by such means as reducing the weapons pile-up, or fostering better relations between the US and USSR. A ten-year goal would see the original bondholders making profits while the prospects for peace looked ever darker. A fifty-year goal would have seen the value of their holdings collapse before and during the Crisis.

The point is not only that peace sustained for a decades-long period encourages longer-term thinking. It is also that by choosing the longer-term goal, our targeting of a relatively easy-to-measure metric like deadly violence and its consequences, we shall inevitably do much to eliminate the much less quantifiable - but hugely important - precursors of violence. 

Answering the phone quickly is not a health goal

Another story - this from the UK - shows what happens when we have Mickey Mouse micro-objectives rather than broad meaningful goals:

In January 2016, Lincolnshire Police began an investigation after an allegation that staff within the Force Control Room were calling 999 at quiet times, to ensure calls were picked up quickly to improve performance statistics. ... Today [23 May], five Force Control Room staff have been suspended from duty and have been informed they are under investigation. Source

('999' is the emergency phone number in the UK.) I've been inveighing against these micro-goals for years (here's my first blog post on the subject). Their basic problem is that they arise from the narrow, short-term needs of organizations, rather than the people these organizations are supposed to serve. They're too easy to game, and their achievement is - to put it kindly - not inextricably linked to improvements in the well-being of ordinary people.

A Social Policy Bond regime would be different. We'd target for improvement broad, meaningful goals, such as the health of the entire population. Bondholders would benefit by financing projects that accelerate the achievement of society's targeted outcomes, rather than, as so often today, turning up for work and fulfilling some meaningless quota.

What is government for?

Simon Calder writes about the effects of European Union regulation, EC261, which says that airlines must pay at least €250 to every passenger who arrives three hours or more behind schedule. Mr Calder quotes one senior airline executive:

Of course, if we are approaching a three-hour delay, we may decide to accelerate the turn-round by leaving bags behind. When airlines deliberately leave behind your baggage, Simon Calder, 'the Independent', 21 May

He imagines how passenger would react to this announcement from an airline captain:

Only half the bags have been loaded. We can either set off now, and be two hours 55 minutes behind schedule, or wait for another 10 minutes to load the remainder. 

Passengers would vote unanimously to wait another ten minutes. But EC261 makes such an onboard referendum unlikely, stipulating, as it does, "a blunt three-hour boundary between paying out nothing and being exposed to compensation claims amounting to tens of thousands of pounds."

You might think, as I do, that government would do better to leave this sort of micro-management to the market. But every organization, including every government agency, however well-meaning and hard-working, has as its over-arching goal self-perpetuation. Formulating, propagating and enforcing Mickey Mouse micro-objectives like the three-hour deadline doesn't help passengers, still less airlines, but it does promote the unstated (and perhaps even unconscious) goal of government: to expand its role.

A Social Policy Bond regime would be different. it would target broad goals in essential areas, such as health, crime or - at a supra-national level - war. These goals would be meaningful to ordinary people, and the agencies who take on the role of goal-achievement would have a composition and structure that would adapt to changing circumstances and expanding knowledge of the causes and effects of social problems.These organizations would subordinate all their activities to the achievement of society's goals - in stark contrast with our current policymaking system.

Hidden metrics

Hidden metrics, not to be confused with the hidden variables of quantum mechanics, are one possible way of preventing the gaming that could otherwise result from targeting specific quantitative outcomes.

Let me explain. Say we are targeting female literacy in Pakistan. We issue bonds that will be redeemed when the literacy level of 15-year old girls in Pakistan exceeds 95 percent each year over a ten-year period. Campbell's Law tells us, rightly I think, that:

The more any quantitative social indicator (or even some qualitative indicator) is used for social decision-making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor. Source

What metrics could we deploy that measure, accurately and inevitably, that which we want to achieve: namely, near-universal literacy for 15-year old Pakistani girls?  We could subject every girl of that age to a standard reading test, but we know that academic tests and their results, even in developed countries, are manipulated. Girls could be taught to the test (by, for instance, being given the test in advance and taught to memorise it by rote). Or anyone up the ladder from the administrators of the test to the collators of the results could be bribed to alter the data at any stage.

So instead we could take a random sample of, say, 100 schoolgirls from 100 districts around Pakistan at ten yearly intervals, and test them in non-standard ways for their literacy. We don't reveal which districts, let alone which girls, will be chosen; nor do we release exact details of the test. That makes it much harder to game the outcome.

More complex is the goal of peace. Now, nuclear peace is relatively easy to target: we can issue bonds that will not be redeemed, say, until a thirty-year period has elapsed during which there has been no detonation (accidental or not) of a nuclear weapon that kills more than 100 people. But what about peace more generally? Hot wars are fairly easy to recognise and define and so would be correspondingly easy to deter using a bond regime. But there are more nebulous ways of fomenting conflict between states (Ukraine), or of ratcheting up tension to levels that severly curtail quality of life.  In these instances we could use an array of metrics such as: trans-border movement of weapons, numbers of people killed or fleeing their homes. Even the lack of information could also be an indicator of conflict that could find its way into our calculations. We could also use survey data, such as attitudes about potential enemies, or expressions of fear. Other potential indicators are disruptions to food, water or electricity supplies and other results of damage to infrastructure. 
 
The important point is that in this as in other goals, we need not and indeed should not specify in advance exactly which combination of metrics and indicators will be used to determine whether or not the bonds' redemption terms shall be deemed satisfied. In general, we try, as far as possible, to target metrics that are, or that are inextricably linked to, exactly what we want to achieve. Where that is difficult, we try to prevent gaming by not specifying too far in advance the exact redemption terms of the bonds. The aim, at all times, is for bondholders to comply with the spirit as well as the letter of the goals set by the backers of the bonds.

Stupid incentives reward stupid behaviour

David Simon goes a long way toward explaining why policing in Baltimore has gone awry:

How do you reward cops? Two ways: promotion and cash. That's what rewards a cop. If you want to pay overtime pay for having police fill the jails with loitering arrests or simple drug possession or failure to yield, if you want to spend your municipal treasure rewarding that, well the cop who’s going to court 7 or 8 days a month — and court is always overtime pay — you're going to damn near double your salary every month. On the other hand, the guy who actually goes to his post and investigates who's burglarizing the homes, at the end of the month maybe he’s made one arrest. It may be the right arrest and one that makes his post safer, but he's going to court one day and he's out in two hours. So you fail to reward the cop who actually does police work. But worse, it’s time to make new sergeants or lieutenants, and so you look at the computer and say: Who's doing the most work? And they say, man, this guy had 80 arrests last month, and this other guy’s only got one. Who do you think gets made sergeant? And then who trains the next generation of cops in how not to do police work? I’ve just described for you the culture of the Baltimore police department amid the deluge of the drug war, where actual investigation goes unrewarded and where rounding up bodies for street dealing, drug possession, loitering such – the easiest and most self-evident arrests a cop can make – is nonetheless the path to enlightenment and promotion and some additional pay. Baltimore’s Anguish: Freddie Gray, the drug war, and the decline of “real policing.”, David Simon, 29 April

Two points I would make.

One: in our complex society we are going to have to target quantitative indicators. To do so effectively these indicators need to be meaningful to ordinary people must be, or must be inextricably linked to, improvements in well-being. The alternative to such indicators are the sort of Mickey Mouse, micro-targets that motivate the Baltimore police to maximise the number of arrests they make or, for instance, keep patients in UK ambulances hovering outside hospitals so that they can meet a 'seen within 4 hours of entry into hospital' micro-target. 

Two: incentives are important. People — even well-intentioned and hard-working people — will react to incentives; and if these incentives are to carry out stupid activities that conflict with society's well-being, then they will carry out those activities and we shall see a decrease in society's well-being. It's not that complicated.

Et tu, academia?

There are sound reasons for being disdainful of quantitative targets in policymaking - something that forms the very basis of Social Policy Bonds. But, perhaps unfortunately, in our highly aggregated, complex, societies, the alternative to targeting broad, explicit and, most important, meaningful goals is to target narrow, opaque goals that are devoid of meaning in that they do nothing to improve social well-being.

I've blogged before about the proliferation and futility of such Mickey Mouse micro- (here and here for instance) and macro-targets (here and here). So it's disappointing, though not surprising, that the academic world is following the trend. See here, for instance, to read about cash for citations. Or here, for how to find "outfits that offer to arrange, for a fee, authorship of papers to be published in peer-reviewed outlets. They seem to cater to researchers looking for a quick and dirty way of getting a publication in a prestigious international scientific journal."

If we are going to combine financial incentives with numerical targets then we need to make absolutely certain that those targets are, or are inextricably linked to, robust indicators of social well-being. The alternative? Well, it is what we have now: indicators defined not by society, but by vested interests within organizations who suspect that broad, meaningful indicators would threaten their way of doing things, their status, or indeed their existence. 

Measureable versus immeasurable goals

Theodore Dalrymple writes:

[W]e suffer nowadays from an unease in talking about what cannot be easily measured, such as life expectancy. If I say something that would once have seemed perfectly obvious, such as that loneliness is undesirable, someone will demand the evidence. Life expectancy can be measured; and we are inclined to believe that what can easily be measured must be more important than what cannot. The result is a lot of pseudo-thought. ‘Hell is other people?’, Theodore Dalrymple, 'Salisbury Review', 20 October

In our large, complex societies, government bodies have enlarged their role and largely supplanted families, extended families, and communities in supplying a range of welfare services to a large proportion of their populations. Increasingly, and of necessity, government relies numerical indicators to manage its resource allocation.

But this use of indicators is relatively recent, unsystematic and unsophisticated. Few indicators are targeted explicitly for a sustained period: the targeted range of inflation is a rare exception, as is the coherent range of indicators presented in the UK Government’s attempt to tackle poverty.  Other indicators, such as the length of hospital waiting lists, don’t measure what matters to people or are prone to manipulation. Even when numerical goals are clear and meaningful they are rarely costed, they are almost always too narrow, and they are largely chosen to mesh in with the goals and capabilities of existing institutional structures. Those broad targets that are targeted with some degree of consistency tend to be economic aggregates, such as the inflation rate, or the rate of growth of Gross Domestic Product — which appears to be de facto indicator par excellence of rich and poor countries alike. But GDP’s shortcomings as a single indicator of the health of an economy are well known.

What would a Social Policy Bond regime, though, say about those things that cannot readily be measured, like loneliness? In the absence of objective, reliable indicators of mental well-being perhaps the best approach would be for government to step back and target only those quantifiable indicators or goals that are inextricably linked to those sorts of well-being that we can measure. But that would not be enough: some government activities aimed at, to take our current discussion, lengthening life expectancy could well increase loneliness. Think, for instance, of government support for roads, which may well have the effect of both lengthening life expectancy and increasing loneliness.

Facing this dilemma, I have a response, rather than an answer. A Social Policy Bond would set policy targets by consensus. People understand outcomes more than the means of achieving them, and so could and would participate in the policymaking process, including the setting and relative priority of social goals. There would be more buy-in to policy, which itself might go some way toward relieving the negative impacts of certain decisions. There's no perfect solution, but a bond regime, because of this additional opportunity for public participation that it offers, and because it forces clarity over exactly what we want to achieve as a society, could help to resolve conflicts between measurable and immeasurable goals.

Mickey Mouse targets: gargantuan impact

From The Economist:

Like almost every other local government in China, Xianghe’s has an urbanisation target: 60% by 2017, up from around 50% today and ahead of the national target of 60% by 2020. Since the global financial crisis in 2008, governments have been hardening such objectives as a way of stimulating growth, and have been borrowing heavily to meet them. Emerging from the shadows, 'The Economist', 19 April

Targets such as these, including especially the universal (apart from perhaps in Bhutan) and much-revered de facto target of governments everywhere, Gross Domestic Product, are Mickey Mouse in conception and in their relationship to ordinary people's well-being, but not, unfortunately, in the impact they have on us all. They are top-down targets, favoured by the political caste and their functionaries. They become the sole focus of bureaucrats' attention to the exclusion of anything else. When it comes to urbanisation in China, the impacts are socially and environmentally disastrous: local governments scramble to meet the targets by throwing peasants off the land they and their families have been farming for generations. One result, The Economist continues, is...

 ...the rampant urban sprawl encouraged by local governments’ ability to seize rural land at will. Such unrestrained expansion may work in parts of America where there is plenty of empty land (albeit at a cost to the environment and often to the quality of life). In China, where urbanisation has forced around 40m farmers off their land over the past three decades, usually with little or no compensation, it will not.

There's a stark contrast between the ad hoc, spurious, almost random nature of targets like urbanisation rates, and the serious negative impacts they have on everyone other than the people who dream them up. 

People who make policy for large societies need to rely on some sorts of numerical indicators of society's goals and how quickly we are reaching them. But indicators and targets should be well thought out and as consensual as possible. They should be in themselves, or be inextricably linked to, things that we actually want to achieve. In other words, they should not merely have (perhaps) been associated with social well-being in the past. They should be outcomes that are meaningful to ordinary people, because that's what matters most and that is what will encourage people's engagement with policymaking and hence buy-in to policies that affect us. Mickey Mouse indicators like urbanisation, or GDP are just not good enough. They speak of a growing and dangerous alienation of rulers from ruled.

Metrics for peace

Social Policy Bonds have their most marked advantage over conventional policy when trying to solve complex solutions for which there is no single, knowable, solution. Climate change (or some of its impacts), crime, or infant mortality in the poorest countries are examples of such problems, as too is violent political conflict: war or civil war.

For issuers of World Peace Bonds, or Middle East Peace Bonds the challenge is not how to achieve peace - that will be left to bondholders - but how to define it in such a way that its achievement will robustly and verifiably have brought about societies in which most of us would be happy to live.

A start would be to issue bonds that would become redeemable when there has been no nuclear explosion that kills more than, say 100 people before 1 January 2050. We could of course issue bonds targeting nuclear peace for decades beyond that date. Similarly, we could target sustained periods of peace relative to today's world: bonds that would become redeemable if the annual numbers of people killed in conflict fall below 50 percent of the average levels from 2007-2012, say, for a period of 10 years.

But a ruthless and powerful dictator could impose those sorts of peace by simple blackmail. We could perhaps therefore combine our main peace goal with other conditions that will have to be satisfied for the bonds to be redeemed. These could include broad quality of life indicators, including the well-being of all communities in a population. It might also be worthwhile to classify as outcomes such essentials for war as weapons, or the sums spent on them, or the number of men and women under arms, and target these for reduction too. We might also want to target attitudes of people towards people of different countries, ethnicities or religions, in ways that will discourage politicians and others from provoking conflict.

Feeding into such attitudes, or possibly as another target to be considered by bond issuers might be to encourage intermarriage between communities that are currently antogonistic. For most governments, advocating or even discussing such an idea would be political suicide. But for holders of Middle East Peace Bonds, for example, it would merely be another tool that can choose to use or not, depending on their view of how effective it will be. Under a bond regime targeting the end of violence between communities in conflict, no official programme of sponsored intermarriage need be contemplated. Bondholders, though, could do, or cause to be done, things that governments cannot do. There would be no sinister motives underlying their actions; their motive, clear and comprehensible to all, would be explicitly mercenary with no sinister overtones: to raise the value of their bond holdings. As human beings, most of us agree that anything that resolves conflict peacefully and at a bearable cost should be encouraged. Apart from fanatics, even the devout on both sides of most conflicts, away from public fora and in their cooler moments, would put human survival above ethnic purity or identity politics. Even a little intermarriage between two warring factions could go a long way.

Most likely, under an enlightened Peace Bond regime, intermarriage, rather than being directly encouraged, would be the happy outcome of a range of projects aimed at increasing informal contacts between two sides of a conflict, including such trustbuilding measures as lower barriers to trade, school exchange visits, or mixed sports teams. One of the benefits of the Social Policy Bond concept is that it can stimulate actions like these including, if necessary, the direct sponsoring of intermarriage, or the birth of mixed-ethnicity children which, if governments were to undertake them directly, would be met by near universal disdain and opposition.

Metrics must be broad

Social Policy Bonds rely heavily on targeting measures of social and environmental well-being. That's a potential problem. Sue Halpern is writing about algorithms and metrics in a different context, but what she says applies to policymaking on behalf of any but the smallest population:

But the real bias inherent in algorithms is that they are, by nature, reductive. They are intended to sift through complicated, seemingly discrete information and make some sort of sense of it, which is the definition of reductive. But it goes further: the infiltration of algorithms into everyday life has brought us to a place where metrics tend to rule. This is true for education, medicine, finance, retailing, employment, and the creative arts. Are we puppets in a wired world, Sue Halpern, 'New York Review of Books', dated 7 November

The potential problem is that the metrics we use in policymaking might not correlate with societal well-being. Unfortunately, the alternative to a coherent, explicit, considered use of metrics in national policymaking is our current system, which features the unsystematic and de facto use of incoherent metrics that are too narrow and short term in their scope to bring about a rational allocation of resources. Applying broad, meaningful metrics to the health sector, say, is going to be far more efficient and welfare-enhancing than targeting a particular disease, just because the scope for efficiency gains is far bigger when resources can shift between different activities according to where they will be most cost effective.

The other problem with narrow metrics, however well meaning, is that they can easily be gamed. Thus:

 Yet indicators of maternal health [in Laos] are worse than in Cambodia ... and levels of malnutrition are atrociously high. To make things look not quite as bad, NGO types say, the government deliberately went around feeding children in villages monitored by the UN for the Millennium Development Goals—until it was found out. The future of Laos: a bleak landscape, 'The Economist', 26 October

Think: meaningful outcomes

In our large and complex societies policymakers are, inevitably, using numerical indicators in an effort to target well-being. But these indicators are often deeply flawed. My previous post pointed out some of the flaws in the use of GDP per capita as a measure of social well-being. But there is also a proliferation of useless micro-targets, as this excerpt from the UK's Daily Mail makes clear: 

How offences can vanish 

High-profile and politically sensitive crimes, such as robbery and burglary, are reclassified. For example, a robbery may be transformed into ‘other theft’ or a burglary called criminal damage. Shockingly [sic], some offences are recorded as ‘no crime’ because there is no direct evidence. A mobile phone owner may not be able to prove it was stolen so it is written down as ‘lost’. Frontline police representatives suspect many victims do not bother to report crimes because their local police station is closed. Others no longer insure household goods and therefore do not report losses. Daily Mail, 16 May

A Social Policy Bond regime would require us to be clear about what we actually want to achieve. We would formulate policy in terms of meaningful, verifiable outcomes, rather than vague, vapid sentiment, or, as in this example, targets that can easily be gamed or manipulated. This would be inherent in the way the bond regime operates. The benefits of expressing policy goals in such terms would be equally clear: more transparency, stability, efficiency, public participation and, therefore, public buy-in.

It's all too complicated

Our financial system has become as complicated as our social and physical environments. All are too complicated and too rapidly changing for ordinary people ever to understand fully so, by default, hugely important policy decisions are made by people who are at best, under-informed or, at worst heavily influenced by the campaign funding contributions of vested interest groups. We aren't going to see a reduction in complexity; not in our social and physical environments. There are just too many variables and time-lags, combined with rapidly changing circumstances and growing knowledge of scientific relationships. Politicians can readily escape or deflect censure even for their worst policies, because the relationships between cause and effect are too delayed or obscure to identify unambiguously. The incentive to get long-term policy  right is correspondingly diluted.


Social Policy Bonds don't require a prior knowledge of cause and effect. Instead, they start from broad, desirable social and environmental outcomes. Say we want to increase society's physical well being, defined as some agreed, weighted combination of objective indicators, such as longevity, Quality Adjusted Life Years, etc. It would not then be up to policymakers to establish, rule on (or obscure), say, the relationship between burning coal and lung disease, or between a new drug and its net benefit; instead our politicians would, in effect, contract out the achievement of society's health goal to a motivated coalition of investors, with powerful incentives to reward the most efficient ways of improving society's health and, crucially, to terminate the least efficient.

Health, like a robust financial system and a benign physical and social environment, is too complicated for anybody to understand. But, rather than resign ourselves to cynicism and despair, we could adopt some or all of the most salient features of a Social Policy Bond regime: a focus on desirable outcomes in the form of broad, quantifiable, goals; and the channelling of market incentives into their achievement.

Corridors are not wards

Theodore Dalrymple writes:

I remember a manager in the hospital in which I worked before my retirement, with no medical or even nursing qualifications, prowling the wards to look for patients who could be hurried home so that beds would become available for patients who would otherwise break the government's four-hour rule, that is to say the rule that no patient should wait more than four hours after the decision to admit him had been taken. The concern that patients should not have to wait for more than four hours was not for their sake, of course, but merely so that the central government could claim that it was improving services, and so that the hospital could claim to have met its target. In the event the target was met by the simple expedient of redesignating hospital corridors as wards, satisfactory all round - except for the patients, of course. A healthcare system suffocated by bureaucrats, Theodore Dalrymple, 'Standpoint' (online only), Jan/Feb

The well-being of a large, complex society, is inevitably going to mean giving priority to numerical indicators. In the absence of meaningful, broad indicators of well-being, we instead default to the targeting of deeply flawed accountancy measures (like Gross Domestic Product) and a plethora of meaningless micro-targets, like those about which Mr Dalrymple writes. It's not working.

A Social Policy Bond regime would bring some much-needed clarity to the hugely important task of defining, and prioritising, the essential elements of societal well-being. We could all participate in such an exercise. We all understand outcomes, and we can all have an opinion about which broad social and environmental outcomes are the most important to ourselves and society. That's a stark contrast with the current policymaking system, which in most countries is now largely under the control of the few interest groups who can afford to pay specialists to understand, manipulate and subvert the democratic process in their favour.

Galactic rhetoric

Mark Steyn, quoting President Obama, writes: 

"Let's cut in half the energy wasted by our homes and businesses over the next 20 years." What does that even mean? How would you even know when you've accomplished that "goal"? What percentage of energy used by my home and business is "wasted"? In what sense? Who says? Who determines that? Is it 37 percent? 23 percent? So we're going to cut it down to 18.5 percent or 11.5 percent by 2033, is that the "goal"? Magical Fairyland budgeting, 16 February

Our political discourse is infested with these grandiose-sounding, but meaningless 'goals'. Their purpose is simple: to deceive. As Mr Steyn points out they are meaningless to ordinary people and unverifiable by design. Politicians can get away with such pronouncements only because we, the voters, are not encouraged to think in terms of outcomes. Policymaking has become a public relations exercise coupled to arcane legalistic debates about funding arrangements and institutional structures. Only vested interests and their paid lobbyists can stomach engagement with the real purpose of policymaking. The rest of us have to be content with the high-flown vapid rhetoric of the front men.

There is another way. Social Policy Bonds would recast policymaking in terms of outcomes that are meaningful to ordinary people. Instead of Mickey Mouse micro-targets that lose all meaning when we focus on them, a bond regime would agree on broad social and environmental outcomes, and reward people who achieve them. Because these outcomes would be meaningful and quantifiable, a wider public could engage with the policymaking process - an end in itself as well as a means toward securing more buy-in. Take the energy 'goal' that President Obama is talking about in the quote above: under a bond regime we'd ask ourselves, and have to ask ourselves: what do we really want? Is it a reduction in wasted energy? A reduction in wasted fossil fuel energy? A reduction in fossil energy use per unit GDP? Perhaps it would be better to target for reduction the negative impacts of energy use? These are questions which should be the subject of legitimate debate by all of us and under a bond regime they would be. Under the current system they aren't. Instead we are served up with a baleful combination of galactic-sounding rhetoric dreamed up by Public Relations experts, and real-world policies designed by and for entrenched interest groups. Any correlation with policies that benefit ordinary people is entirely coincidental.

Ticking boxes is not the same as achieving goals

Josie Appleton, of the UK's Manifesto Club, reads 'a lot of child protection policy documents':

They are often hundreds of pages long, yet I have never seen a proposal that would prevent a paedophile from getting access to children. Instead, there are all sorts of rules – rules about how you transport children to football matches, rules about how you take photographs, rules about late pick-up policies for when the parents don’t turn up on time to take their kids home from some activity or other. So there is this morass of bureaucracy, yet there’s not one identifiable useful functional element within it. What you have then really are rules for the sake of rules. Why everyday life is tied up in red tape, 'Spiked', 18 December

It's the triumph of process over outcomes. Ticking boxes has become more important than achieving society's goals. Avoidance of litigation becomes the guiding principle. Compliance with procedure is what matters. We see this in so many policy areas: from climate change to health care, where it takes the form of defensive medicine.

Society is increasingly dominated by government and big business. As Ms Appleton suggests, bureaucrats have as their goal the proliferation of rules and ensuring compliance with them. Politicians have the de facto goal of maximising Gross Domestic Product. And the private sector goal of maximising profits as measured by accountants, and ignoring any non-market negative impacts of their activities. In a crowded, complex world, with so many time lags and linkages, these goals are increasingly irrelevant to those of ordinary people. Worse, they often conflict with them.

Social Policy Bonds could realign the interests of government and big business with those of society. Instead of processes that are supposedly aimed at achieving outcomes, government would target the outcomes themselves. At the global level, it could target the negative impacts of climate change. At the national level, it could target meaningful health outcomes. A bond regime would encourage government to do what it does well: articulate society's goals and raise the revenue to achieve them. Where the current system goes awry is in government's trying to identify the processes that will lead to certain outcomes. In a complex, changing world, it cannot often do this effectively. So it's prone to listen to lobbyists for groups whose interests rarely coincide with those of society. The gap between government and people grows. Social Policy Bonds could close that gap.

Screening is not a valid policy goal

In the absence of broad, clear, coherent policy objectives, we unfortunately default to Mickey Mouse micro-objectives that sound convincing, but whose achievement has little or nothing to do with social goals, and can even conflict with them. Narrow objectives are more likely to be gamed in this way, because resources can more readily be shifted from a similar goal that doesn't happen to be targeted. That is one of the reasons why, unlike with the well-publicised Social Impact Bonds, I have always insisted that Social Policy Bonds be tradable. (See here for an explanation of this logic.)


Here's another example of  a Mickey Mouse micro-objective which, after enough time has elapsed to prove its worthlessness, is at last being questioned:

Can we please stop using screening mammography as measure of how well our health care system is performing? That’s beginning to look like a cruel joke: cruel because it leads doctors to harass women into compliance; a joke because no one can argue this is either a public health imperative or a valid measure of the quality of care. Cancer Survivor or Victim of Overdiagnosis?, H Gilbert Welch, 'International Herald Tribune', 21 November

 

The unimportance of being right

From 1493: Uncovering the New World Columbus Created, by Charles Mann:

Provincial, county, and village officials [in present day China] are rewarded if they plant the number of trees envisioned in the plan, not whether they have chosen tree species suited to local conditions (or listened to scientists who say that trees are not appropriate for grasslands to begin with). Farmers who reap no direct benefit from their work—they are installing trees that do not produce fruit, cannot be cut for firewood, and supposedly stop erosion miles from their homes—have little incentive to take care of the trees they are forced to plant. The entirely predictable result is visible on the back roads of Shaanxi: fields of dead trees, each in its fish-scale pit, lining the roads for miles. “Every year we plant trees,” the farmers say, “but no trees survive.” (page 230, my emphasis)

It's not only in China. Everybody makes mistakes, but we have political systems that don't look back on obviously failed experiments and learn from them. Very often instead they pump more scarce resources into them, afraid of admitting to themselves and others that there's something wrong with their policymaking process. Perhaps the politicians and bureaucrats believe that the system in which they are so invested must not be seen to be faulty. It might, then, be questioned. Whatever the reason, the consequences are dire.

Social Policy Bonds would change that paradigm. They would reward successful, efficient ways of achieving society's social and environmental goals. They would stimulate diverse, adaptive approaches, in stark contrast to the uniformity that afflicts government programmes in the west as well as in China. Crucially, under a bond regime, failed experiments would be terminated: their proponents would have every incentive to administer the axe themselves, freeing up resources to investigate better approaches, with their sole guiding principle that of being more efficient in achieving society's targeted goal.

Metrics for peace

Middle East Peace Bonds, or Conflict Reduction Bonds, are all very well, but how are we to define what we mean by 'peace'? The conventional definition  doesn't necessarily mean human well-being, or the absence of the threat of war. There was no open conflict during the Cold War, for instance, but it wasn't exactly a stable, beneficial state of existence.

Fortunately, Social Policy Bonds are versatile, in that they can target an array of goals, each of which has to be satisfied if the bonds are to be achieved. Furthermore of these goals can take the form of a range of values, within which an outcome must fall for the bonds to be redeemed. Moreover, since our goal is for a sustained period of peace, that condition can also be embedded in the targeted outcome.

Experts and the public could come up with the necessary and sufficient conditions for a benign peace. Here are some suggested starting points:

• Numbers of people killed in armed conflict

• Spending and military strength

Military strength is an estimate of both military personnel and military equipment. The rationale for including this measure is similar to that for including military expenditure: it represents both the opportunity cost of resources lost to the life-enhancing parts of the world economy, and it is an indicator also of the potential for violence, and so an indicator of human insecurity or anxiety. While estimates of materiel could be subject to the same imprecision as spending on armaments, numbers of military personnel might be easier to quantify for targeting purposes in some regions of actual or potential conflict.

• Mass media indicators of impending conflict

Social Policy Bonds aiming at peace could also target events that are likely to lead to war, such as efforts to gain public support. There appears to be strong evidence (see Getting to war: predicting international conflict with mass media indicators, W. Ben Hunt, University of Michigan Press, 1997) that the underlying intentions of governments can be accurately gauged by a systematic analysis of opinion-leading articles in the mass media, regardless of the relative openness of the media in question. Such analysis allows the prediction of both the likelihood of conflict and what form of conflict - military, diplomatic or economic - will occur.  This sort of indicator could be useful as a target where military conflict has not begun, but appears possible, and where other data are scarce.

There are going to be problems with accurate assessment of all these measures, but they are unlikely to be insurmountable.