1. Policy as if outcomes mattered Social Policy Bonds www.SocialGoals.com

2. Outcomes  Social and environmental outcomes are those that are meaningful to ordinary people

3. 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

4. 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

5. The unimportance of being right  Failures don’t terminate: they can self- perpetuate or even self-reinforce  Success and reward are uncorrelated

6. Society is complex and fast- changing  Too complex for any single organisation to comprehend  Need evolutionary methods: diverse, adaptive approaches

7. Solution  Specify targeted outcome  Reward achievement of the outcome  Subordinate markets to outcomes, not the other way round

8. Social Policy Bonds  Contract out achievement of outcome to highest bidders  Bonds auctioned and tradeable  Bonds redeemable once objective achieved

9. 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

10. Potential problems  Free-riders?  Rewarding people out of proportion to their efforts?

11. Advantages  Efficiency  Stability  Transparency  Buy-in

12. 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

13. Social Policy Bonds  www.SocialGoals.com  rh@socialgoals.com rh@socialgoals.com