Policy as if outcomes mattered Social Policy Bonds www. Social. Goals. com
Outcomes o Social and environmental outcomes are those that are meaningful to ordinary people
Social problems are currently solved indirectly q Relies on correct identification of relationship between cause and effect q Depends on people whose success does not generate greater financial reward
Where government works best o Relationship between cause and effect is clear and static o But today many social and environmental problems are complex and fast changing o Best solutions to such problems are evolutionary: terminate failures
The unimportance of being right o Failures don’t terminate: they can selfperpetuate or even self-reinforce o Success and reward are uncorrelated
Society is complex and fastchanging o Too complex for any single organisation to comprehend o Need evolutionary methods: diverse, adaptive approaches
Solution o Specify targeted outcome o Reward achievement of the outcome o Subordinate markets to outcomes, not the other way round
Social Policy Bonds o Contract out achievement of outcome to highest bidders o Bonds auctioned and tradeable o Bonds redeemable once objective achieved
Generating incentives o Market value of bonds approach redemption level as goal becomes more likely o Incentives cascade down from bond holders o Incentives dictate structure as well as activities
Potential problems o o Free-riders? Rewarding people out of proportion to their efforts?
Advantages o o Efficiency Stability Transparency Buy-in
Social Policy Bonds o Governments do what they are good at: n n o Articulating society’s goals Raising revenue Markets do what they are good at: n Allocating scarce resources with maximum efficiency
Social Policy Bonds o o www. Social. Goals. com rh@socialgoals. com
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