Meghan Joy and John Shields
Social Impact Bonds (SIBs) are a social policy tool that claims to solve complex policy problems, such as homelessness, unemployment, and recidivism, through the scientific methods of financial modelling. Actively supported by several governments worldwide, SIBs provide a mechanism to turn the risky behaviours of vulnerable individuals into a form of profit making for private impact investors. SIB projects target population groups, such as the homeless, troubled youth, and obese, whose problems result in costly use of emergency-oriented public services such as shelters, prisons, and hospitals. In this way, SIBs are positioned as preventative, allowing future savings on costly public programs. These savings, also known as impacts, outcomes, or results are measured for their social value created (Dowling & Harvie, 2014). The SIB instrument places a current price on anticipated social value based on the assessed future risk that participants will not be reformed. Risks become a reward as investors bet on the extent to which vulnerable people will be transformed.
Social Impact Bonds (SIBs) are a new tool in the arsenal of neoliberal capitalism that might best be seen as an extension of public-private partnerships into the realm of social policy. As part of the pay-for-success movement, SIBs marketize social policy in ways that empower venture capitalists to profit from the misfortunes of others. The solution to difficult social problems has been cast with SIBs as a profiting from pain model.
The aim of our recent article in Policy & Politics entitled Austerity in the Making: Reconfiguring Social Policy through Social Impact Bonds is to identify future avenues for empirical research on SIBs to further assess how the tool reconfigures social policy and with what consequences for democracy and equity. Continue reading Profiting from Pain: social impact bonds and social policy