Health Care Management Papers

Document Type

Working Paper

Date of this Version

4-2013

Publication Source

National Bureau of Economic Research Working Paper Series

DOI

10.3386/w18991

Abstract

This note considers a relatively new form of financing for social services, the "Social Impact Bond." Proponents of Social Impact Bonds argue that they present a solution to several problems in funding social services, including performance measurement and the distribution of risk. Using a simple model, we demonstrate that Social Impact Bonds have many features present in standard financing arrangements. They will lead to greater program success when investors' effort can positively influence outcomes, but are unlikely to do so otherwise. We conclude that the value of this funding innovation will be strongly context-dependent.

Comments

This is a working paper, not accepted for publication or review.

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Date Posted: 27 November 2017