Paper short abstract:

This paper examines the emergence of social impact bonds (SIBs) as a unique market in social services and a new way to create value from human assets. The forms of evaluation and monetization that underlie this market are explored and SIBs are conceived in terms of a different kind of ‘bio-economy.’

Paper long abstract:

In the wake of the financial crisis of 2008, many Western governments have moved to cut public expenditures for social services while pursuing alternative sources of funding. One such alternative is social impact bonds (SIBs). Pioneered in the UK in 2010, SIBs are investment contracts in which private investors provide funding for social programs offered by nonprofit agencies. If programs meet performance targets, the government will repay the capital and provide a return based on the long-term cost savings realized from reduced demands on related public services. If programs fall short of their targets, investors lose their capital. While an emerging policy and academic literature has identified several potential strengths and limitations of the SIB model, a key aspect of SIBs that has been overlooked thus far is the work required to build a viable SIB market infrastructure. This includes the development of evaluation metrics and techniques that allow for the quantification of program impact and thus the monetization of outcomes as identifiable cost savings and investor returns. Drawing from a larger study of SIBs in Canada, the U.S., and UK, and informed by work in the social studies of finance (SSF), this paper explores the technologies and practices of (e)valuation that underlie these nascent markets in social services and their attempt to translate pressing social issues into marketable investments. The fact that these investments hinge on the creation of a new type of human asset (e.g. the non-recidivist) points to the emergence of a different kind of 'bio-economy.'