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