Prioritising health rather than hospital design

Sadly, but not unexpectedly, my 9500-word essay submitted to a competition concerned with hospital design failed to progress into the final stages of the competition. The question posed was: How would you design and plan new hospitals to radically improve patient experiences, clinical outcomes, staff wellbeing, and integration with wider health and social care? I gave an example, early on in the essay, showing how what is good for the hospital can conflict with what is good for the patient, and went on to explain how the Social Policy Bond concept could maximise what, in my view, we should be trying to achieve: improvements in health, rather than hospital design.The essay can be seen on my website here, and a pdf downloaded from here. A shorter treatment, also describing the application of the Social Policy Bond concept to health is here.

Social Policy Bonds and their variants

Partly to simplify the exposition of the bonds, I haven't delved into  variants of the basic Social Policy Bond principle. These variants include such possibilities as:

• bonds that expire; ie, if the targeted social or environental goal isn't achieved by a certain date, they become worthless;
• bonds that yield a partial payout if the goal is only partially achieved;
• redemption funds that are not placed in escrow, but guaranteed, either by public- or private-sector bodies; and
• payouts indexed to some measure of inflation.

There are many other possible variations on the basic theme: the Social Policy Bond concept is a versatile one and, because it is best deployed on large scale and for long-term social problems, it would be worth exploring the potential of variants on a case-by-case basis. 

On a related note, I have been asked what would happen to the funds intended to be paid out if the terms of a Social Policy Bond issue were not met. I would think that much would depend on who is undertaking to redeem the bonds. If it's a government body, or some supranational body (like the United Nations), I would imagine that any funds placed in escrow could be diverted to other uses within that body. More likely, though, such bodies, being credible, would merely guarantee payout, as in my third bullet point above. These bodies would want to minimise any perception that they will not pay out, partly to reduce their costs (ie, bolster the float value of the bonds) and partly to maintain faith that they will pay out in future bond issues. 

What about smaller bodies, such as a group of philanthropists, with less credibility? In such an instance the funds could remain in escrow, hopefully earning interest, until the goal is actually achieved and sustained. It's likely that these smaller bodies would target goals with a shorter overall time horizon. If, say the goal were the elimination of serious armed conflict: while a UN body, say, could target a sustained period of peace of, say 30 years, I could envisage that a group of philanthropists or non-governmental organisations would have a less ambitious target; perhaps peace in the Middle East sustained for a period of five years. Then, if a conflict were to erupt within that five-year period they need do nothing with the funds; they could patiently wait until a five-year period of peace arises. Or when issuing the bonds, they could have specified the time period during which the goal had to be achieved and, if the bonds fail to achieve the goal within that period, they could simply withdraw their funds from escrow.

For this and further queries see the bonds' FAQ page.

Social goals and the Karpman Drama Triangle

I've written about the crippling limitations imposed on Social Policy Bonds by making them non-tradeable here and here. And I'm sometimes asked why Social Policy Bonds haven't yet been issued, either by government or the private sector, whereas their non-tradable variant (most often known as Social Impact Bonds), are now issued in about 25 countries.

My thinking goes like this. Governments and non-governmental organisations including charities, do not want to relinquish their power to decide who shall supply the goal-achieving services (and so benefit from redeeming the bonds). Nor do they wish to lose complete oversight over how the targeted goals shall be achieved. Ultimately, in my view, it's about power and control, which to many of us are not key drivers, so we may find it difficult to understand their potency. This also, and more disappointingly, applies to philanthropists as well as politicians: it is gratifying to be seen to be granting funds directly to beneficiaries or to people who help those beneficiaries. It is not so appealing merely to contribute to a fund whose eventual beneficiaries cannot be identified. As well, Social Policy Bonds are best deployed when they aim to achieve long-term goals and on a large scale, where the beneficiaries are even less easy to identify and, indeed, might not yet be born.

Another explanation is that, at some level, governments, foundations and philanthropists might be playing the role of Rescuer in what is known as the "Karpman Drama Triangle", involving a Victim, Persecutor and Rescuer, as modelled in transactional analysis. Perhaps this paragraph, from here is pertinent in some cases:

The Rescuer: The rescuer's line is "Let me help you." A classic enabler, the Rescuer feels guilty if they don't go to the rescue. Yet their rescuing has negative effects: It keeps the Victim dependent and doesn't allow the Victim permission to fail and experience the consequences of their choices. The rewards derived from this rescue role are that the focus is taken off of the rescuer. When they focus their energy on someone else, it enables them to ignore their own anxiety and issues. This rescue role is also pivotal because their actual primary interest is really an avoidance of their own problems disguised as concern for the victim’s needs.

I had hoped that SIBs would be stepping stone on the way to Social Policy Bonds. That is still possible, and new technologies are generating are encouraging more interest in my original concept. However, it is also possible that the lack of evidence (pdf) justifying the SIBs that have been issued could discredit the whole bond concept. We shall see. 

Make Xenophobia History: Introducing the Consortium of the Competent

A short, unpublished article, suggesting that people in failed states and badly-run countries be allowed to vote for, or otherwise install, politicians and ex-politicians from different countries who have a record of competence and integrity. It has nothing to do with Social Policy Bonds.

Bees, war, and root causes

From the current issue of the Economist: 

Detecting covid with bees, meanwhile, involves a method that goes back to ivan Pavlov and his dogs. The insects are offered sugar-water alongside SARS-CoV-2-infected saliva samples, but not with uninfected samples. The thus learn to extend their probosces when they sniff covid. The nose knows: Flies, worms and bees could help detect illness, the 'Economist', 31 July

What does this have to do with Social Policy Bonds? It's often suggested that in order to tackle such social and environmental problems as crime, violence, war or climate we need to identify the 'root causes' before we can devise ways of solving them. I disagree. I think our first step should be to clarify exactly what we want to achieve, and then reward the achievement. Let investors in the bonds decide whether it's worth looking for root causes or whether it's more efficient, and quicker, to find different ways of solving our problems. We could (and, effectively, do) delay, say, reducing conflict, by postulating some ideal world in which there is no poverty and everyone is nice to each other. The implicit assumption is that war is an intractable part of human nature, as the ancient Greeks thought. It's a convenient excuse, especially as the search for root causes - usually the task of people whose lifetime earnings are correlated with the time taken to find them - need never end. As Tolstoy put it:

The deeper we delve in search of these causes [of war] the more of them we discover, and each single cause or series of causes appears to us equally valid in itself, and equally false by its insignificance compared to the magnitude of the event.  Leo Tolstoy, 'War and Peace', Norton Critical Editions, New York, 1996 (page 536)

Just as we can train bees to detect covid without knowing about the mechanisms underlying how they do so; so we can target such goals as world peace, reduced crime, or the elimination of poverty without wasting time and energy on endless searches supposedly aimed at identifying their root causes.

This post was intended for publication: 

Social Policy Bonds: an evolutionary approach to social policy

Society is today is so complex and ever changing that it would be more efficient to reward evolutionary solutions to many of our social problems than it is for a government, or any single body to try to develop top-down solutions, which are necessarily be out of date, uniform and inflexible. Just as evolution in nature leads to diverse, adaptive solutions to the problem of surviving in a complex, changing environment, so would an evolutionary approach – given the right incentives - lead to diverse, adaptive solutions to our social and environmental problems. No conventional policy approaches, with their emphasis on fossilised science, self-interested institutions and insufficiently flexible funding arrangements can adapt in a timely way to changing circumstances including our expanding knowledge. Take health: our understanding of the scientific relationships and our technological capabilities are constantly expanding. Most of the interdependencies between intervention and outcome are impossible to identify. In former times links between cause and effect, while not always obvious, were at least discoverable by dedicated medical individuals, such as John Snow who could trace an outbreak of cholera in London in 1854 to one water pump. Today, no single conventional body, public- or private-sector, can effectively monitor all relevant new developments and react accordingly. But while our understanding of the determinants of our health is constantly changing, the goal of better health, as measured by an array of metrics including longevity, infant mortality and quality adjusted life years, is stable. It is some combination of these goals that I believe government should target, not the means by which current science thinks we can achieve them.

The same applies to other social and environmental problems, including those that are deemed intractable, such as eliminating crime, climate change and war. Our ingenuity is boundless: witness the superbly creative television adverts for dog-food, or the ballistic missiles whose nuclear warheads can accurately target and destroy thousands of members of our species on the other side of the planet. I have no doubt that, channelled into more edifying outcomes, our ingenuity could achieve what today seem like remote, impossible, goals.

In economic theory, and on all the evidence, market forces are the most efficient way of allocating our scarce resources. Sadly, markets have a bad press, having been undermined, abused and manipulated so that they now are seldom associated with the public interest.

To ensure that the market’s efficiencies and incentives are directed into public benefit, I suggest that governments issue Social Policy Bonds: a new financial instrument that would inextricably link the rewards gained by efficient resource allocation to the achievement of our social goals. These non-interest bearing bonds would be redeemable for a fixed sum only when a specified social goal – such as improved health – had been achieved and sustained. Whereas their non-tradeable variant, Social Impact Bonds, favour existing institutions, are inherently narrow and short-term in scope, and impose relatively high monitoring costs, Social Policy Bonds’ tradeability would allow the targeting of national, or even global, long-term goals, using approaches many of which will require years of research, trials and refinement before they can be successfully implemented. Investors could buy the bonds and make a profit on them within a limited time frame: the time-till-redemption of the bonds would be much longer than any investor's time horizon. This would encourage long-term planning: bondholders could try an array of innovative approaches, and the incentives would be there for them to refine and implement the most efficient of these and, importantly, to terminate those that are unpromising. This is how evolution selects those species that are best adapted to an ever-changing environment.

The optimal mix of approaches cannot be conceived by any single conventional organisation, which is why I expect that issuing Social Policy Bonds would generate a new type of organisation, whose protean structure, composition and activities would at all times be solely dedicated to achieving society's social and environmental goals at least cost to the taxpayer. 

Under a Social Policy Bond regime government would be doing what it does best: articulating society’s social and environmental goals and raising the revenue for their achievement. But the actual achievement of these would be contracted out to the market, which would continuously direct society’s scarce resources into their most efficient use – all for the benefit of ordinary citizens and the environment.

Ending war: imagery or incentives?

We often hear war correspondents say that they undertake their gruelling assignments so that others will come to realize the horror of armed conflict. I don't doubt their sincerity, nor their bravery in embedding themselves in military campaigns and recording the carnage that is the outcome of man's inhumanity to man. I do, however, doubt whether widely disseminated graphic reports and pictures are the best way, or even an effective way, of bringing about an end to war. They may be the best we have come up with - but they patently haven't ended any form of violent political conflict. 

Piling up weapons, unfalsifiable 'deterrence' doctrine, peace talks, talks about talks: these are roundabout methods of addressing our tendency to destroy others of our species and a big chunk of the natural environment too. They lack even the grim entertainment value of the reporters' images and commentary. Here's a question: if we are truly serious about ending armed conflict, why don't we reward the ending of armed conflict rather than the failed means of preventing it? Incentives matter, and the current incentives are all for arms merchants to sell more arms, for bureaucrats to engage in endless talks, for fanatics and governments to inflame aggressive religious and nationalistic passions. 

Humanity would benefit if there were countervailing incentives, by which I mean financial incentives. The wish that almost everyone has, when we are not reacting to propaganda or provocation, to live in peace, has not been monetised and so, sadly, counts for very little when set against the interests of the weapons manufacturers, bureaucrats and zealots. 

Which is where the Social Policy Bond concept, applied in the service of world peace, could make a contribution. Under a bond regime targeting a combination of such metrics for reduction as numbers of people killed and made homeless, people would be rewarded for the achievement of sustained periods during which wars are reduced or eliminated. 

World Peace Bonds would channel the market’s incentives and efficiencies into ending war. Governments, institutions and anyone else with a genuine interest in peace would contribute to a fund that would be used to redeem the bonds, which would create a coalition of interests with a powerful incentive to reduce the level of violent political conflict. For more about how the bond concept can be applied to conflict reduction, and links to short essays on the subject, see here.

The evolutionary approach to policymaking

In today's polarised political climate Social Policy Bonds suffer by being seen as a 'right-wing' way of achieving 'left-wing' goals, in that they use markets to achieve social and environmental objectives. Rather than appealing to both political ideologies, they appeal to neither. They are also quite unconventional in that they stipulate desirable outcomes and reward people for achieving them. This differs from the usual approach of governments - even those that care about their citizens - which is to take existing bodies (public- or private-sector) as a given, and try to negotiate their competing demands. I think Social Policy Bonds can improve on this approach for two main reasons:

Society is so complex, ever-changing and beset by time lags that it is more efficient to reward evolutionary solutions to our social problems than it is for any single body to try, using current knowledge, to develop solutions that will necessarily be top-down and once-size-fits-all. Just as evolution in nature leads to diverse, adaptive solutions to the problem of surviving in a complex, changing environment, so would an evolutionary approach lead to diverse, adaptive solutions to our social problems. Such approaches are unlikely to be conceived by any single conventional organisation, which is why I expect issuing Social Policy Bonds would generate a new type of organisation, one whose structure, composition and activities would be solely dedicated to achieving society's social and environmental goals at least cost to the taxpayer. 

A Social Policy Bond regime would encourage long-term thinking because (unlike Social Impact Bonds) they would be tradeable, so that the time-till-redemption of the bonds could be much longer than any investor's time horizon. There would be time for bondholders to try an array of innovative approaches, and the incentives would be there for them to refine and implement the most efficient of these approaches - and, importantly, to terminate those that are unpromising. Once the Social Policy Bond concept has been used at the national level, lessons learned could be applied to solution of global problems, including those often thought to be intractable, such as regional or global conflict.

Electric vehicles and nappies

Will replacing vehicles powered by internal combustion engines (ICEs) by those powered by renewable electricity reduce greenhouse gas emissions? It depends on too many variables to justify the actios taken by governments worldwide. A researcher for Jefferies, an investment bank, pointed out that: 

To gain the environmental dividend that governments are looking for, users are going to have to keep them [ie EVs] longer, drive them further than they may have done with a conventional internal combustion energy vehicle.

When they leave the factory, these [electric vehicles] are at a disadvantage. They contain more steel. The brakes are bigger. The battery packs are certainly heavier. Source

Goehring & Rozencwajg, a research firm focusing on contrarian natural resource investments posted a blog in which they call into question a comparison of ICEs and EVs conducted by the Wall Street Journal and, citing the work performed by Jefferies, argue that there could literally be 'no reduction in CO2 output' in some EV vs. ICE comparisons. 

 

I have no opinion as to whether EVs are worse for the environment than ICEs. Even if they are, currently, technology is rapidly changing. As well, brake dust and pollution from tire wear are probably as toxic as engine emissions. These facts point to the need to stipulate the environmental outcomes that we want to achieve, rather than the supposed ways of achieving them. The next step would be to reward those who bring about those outcomes, however they do so. 

  

The problem, and solution, are similar to those concerning nappies. The seemingly simple question of disposable versus cloth embodies in microcosm the inescapable difficulty of making policy about bigger concerns. There are always angles that we cannot foresee. Cleo Mussi, for instance, writes to the New Scientist:

.... I wonder whether the research comparing [cloth] to disposables took into account the fact that babies using cloth nappies tend to be toilet-trained day and night at a much earlier age – there is little more uncomfortable than a wet cloth nappy. A difference of six months to a year would lead to a child using 1100 to 2200 extra disposable diapers or nappies – a lot of extra landfill. Cleo Mussi, Letter to the editor of 'New Scientist', 12 December

Our environment and society are too complex and changing too rapidly for us to favour even one of two types of nappy, just as we cannot say whether EVs or ICEs are preferable. Yet the way we make policy makes little allowance for such difficulties. Typically, a government (heavily influenced by corporate interests or ideological baggage) makes a top-down, one-size-fits-all decision, ostensibly based on fossilised science, and then moves onto something else, rarely revisiting or even monitoring (pdf) its performance.

When bigger challenges than nappies loom, this way of doing things generates commensurately bigger problems. Whether it's climate change or health or global conflict, neither government nor any single conventional organisation can know all about the relevant human and scientific relationships, let alone keep up with them. Nor can they anticipate the diverse effects their policies will have over both time and space. The complexities are too great, and any single body is going to be too pre-occupied with its image, the latest events, or its members' individual goals to care much about outcomes.
 

Only people who are continuously motivated to achieve our goals, to look at the effects of their initiatives, and to adjust their ideas accordingly, can develop the diverse, adaptive approaches that we need to solve our social and environmental problems. Social Policy Bonds are one way in which we could stimulate such initiatives. They have other benefits: most significant here is that issuers of the bonds do not need to specify how a problem is to be solved in order to get people started on solving it. Our goals are stable: the optimal ways of achieving them, especially when complicated by time lags, feedback loops, a multitude of known, unknown and unknowable variables, are not. We can and, in my view, should, issue Social Policy Bonds targeting such goals as solving huge, urgent problems such as climate change even though the ways in which they are to be solved lie are beyond the purview and time horizons of policymakers.

Peace in the Middle East

Who wants it? Ordinary people, mostly. It's difficult, though, for them to express that preference. We're all susceptible to anger and impulse, to propaganda and, especially, emotional television pictures of conflict, and it doesn't help that the financial and status incentives are overwhelmingly on the side of conflict. The arms sellers, the men of (so-called) religion, the state and non-state militias: all have their own reasons for stoking conflict that follow logically from the premisses by which they live. What's missing are countervailing incentives: the unspoken and - in parts of the Middle East, unsayable, on pain of persecution - wishes of ordinary people to make something of the lives and those of their family members. That's where Middle East Peace Bonds could enter the picture. Ordinary people in and outside the Middle East, perhaps following initial contributions from philanthropists, could set up a fund to be used for the redemption of the bonds. The bonds could aim to achieve a sustained period of peace, defined and verified objectively. It would be up to bondholders to devise and investigate the multitude of possible ways in which conflict can be avoided. They would have incentives to deploy only the most efficient of such initiatives.

People often write about 'intractable' ethnic, religious, or territorial conflicts. But these conflicts do fizzle out and then it's apparent that the conflicts were not so intractable after all. The borders between England and Scotland, or England and Wales, are pretty quiet these days. Historical grievances, and notions of fairness or justice, loom large and play a part in perpetuating conflict. But not inevitably. People get tired; the old paradigms die with the idealogues that kept them going; deals are done, compromises made, other events assume greater importance, while time heals. Middle East Peace Bonds could accelerate all these processes. They could channel the wishes of the majority of ordinary people in the Middle East and beyond into the attainment of peace in the region. Incentives matter.