Issuing Bonds to Invest in People

Curated on Posted on by Stefaan Verhulst

Tina Rosenberg at the New York Times: “The first social impact bond began in 2010 in Peterborough, England. Investors funded a program aimed at keeping newly released short-term inmates out of prison. It reduced reoffending by 9 percent compared to a control group, exceeding its target. So investors got their money back, plus interest.

Seldom has a policy idea gone viral so fast. There are now 108 such bonds, in 24 countries. The United States has 20, leveraging $211 million in investment capital, and at least 50 more are on the way. These bonds fund programs to reduce Oklahoma’s population of women in prison, help low-income mothers to have healthy pregnancies in South Carolina, teach refugees and immigrants English and job skills in Boston, house the homeless in Denver, and reduce storm water runoff in the District of Columbia. There’s a Forest Resilience Bond underway that seeks to finance desperately needed wildfire prevention.

Here’s how social impact bonds differ from standard social programs:

They raise upfront money to do prevention. Everyone knows most prevention is a great investment. But politicians don’t do “think ahead” very well. They hate to spend money now to create savings their successors will reap. Issuing a social impact bond means they don’t have to.

They concentrate resources on what works. Bonds build market discipline, since investors demand evidence of success.

They focus attention on outcomes rather than outputs. “Take work-force training,” said David Wilkinson, commissioner of Connecticut’s Office of Early Childhood. “We tend to pay for how many people receive training. We’re less likely to pay for — or even look at — how many people get good jobs.” Providers, he said, were best recognized for their work “when we reward them for outcomes they want to see and families they are serving want to achieve.”

They improve incentives.Focusing on outcomes changes the way social service providers think. In Connecticut, said Duryea, they now have a financial incentive to keep children out of foster care, rather than bring more in.

They force decision makers to look at data. Programs start with great fanfare, but often nobody then examines how they are doing. But with a bond, evaluation is essential.

They build in flexibility.“It’s a big advantage that they don’t prescribe what needs to be done,” said Cohen. The people on the ground choose the strategy, and can change it if necessary. “Innovators can think outside the box and tackle health or education in revolutionary ways,” he said.

…In the United States, social impact bonds have become synonymous with “pay for success” programs. But there are other ways to pay for success. For example, Wilkinson, the Connecticut official, has just started an Outcomes Rate Card — a way for a government to pay for home visits for vulnerable families. The social service agencies get base pay, but also bonuses. If a client has a full-term birth, the agency gets an extra $135 for a low-risk family, $170 for a hard-to-help one. A client who finds stable housing brings $150 or $220 to the agency, depending on the family’s situation….(More)”.

Why the web has challenged scientists’ authority – and why they need to adapt

Curated on Posted on by Stefaan Verhulst

Andrew J. Hoffman at The Conversation: “Academia is in the midst of a crisis of relevance. Many Americans are ignoring the conclusions of scientists on a variety of issues including climate change and natural selection. Some state governments are cutting funding for higher education; the federal government is threatening to cut funding for research. Resentful students face ever increasing costs for tuition.

And distrustful segments of society fear what academia does; one survey found that 58 percent of Republicans and Republican-leaning independents say colleges and universities have a negative effect on the way things are going in the country.

There are multiple causes for this existential crisis, but one in particular deserves special attention. The web is fundamentally changing the channels through which science is communicated – who can create it, who can access it and ultimately what it is. Society now has instant access to more news and information than ever before; knowledge is being democratized. And as a result, the role of the scientist in society is in flux.

But rather than facing this changing landscape head on, research shows that many in academia are resisting its inevitability. In many ways, this response has parallels to that of the Catholic Church in the wake of the invention of the printing press and its role in hastening the Protestant Reformation. I hope this comparison offers a compelling provocation for the scientific community to come to grips with the cataclysmic changes we are now living through and ignore at our peril….(More)”.

How Blockchain can benefit migration programmes and migrants

Curated on Posted on by Stefaan Verhulst

Solon Ardittis at the Migration Data Portal: “According to a recent report published by CB Insights, there are today at least 36 major industries that are likely to benefit from the use of Blockchain technology, ranging from voting procedures, critical infrastructure security, education and healthcare, to car leasing, forecasting, real estate, energy management, government and public records, wills and inheritance, corporate governance and crowdfunding.

In the international aid sector, a number of experiments are currently being conducted to distribute aid funding through the use of Blockchain and thus to improve the tracing of the ways in which aid is disbursed. Among several other examples, the Start Network, which consists of 42 aid agencies across five continents, ranging from large international organizations to national NGOs, has launched a Blockchain-based project that enables the organization both to speed up the distribution of aid funding and to facilitate the tracing of every single payment, from the original donor to each individual assisted.

As Katherine Purvis of The Guardian noted, “Blockchain enthusiasts are hopeful it could be the next big development disruptor. In providing a transparent, instantaneous and indisputable record of transactions, its potential to remove corruption and provide transparency and accountability is one area of intrigue.”

In the field of international migration and refugee affairs, however, Blockchain technology is still in its infancy.

One of the few notable examples is the launch by the United Nations (UN) World Food Programme (WFP) in May 2017 of a project in the Azraq Refugee Camp in Jordan which, through the use of Blockchain technology, enables the creation of virtual accounts for refugees and the uploading of monthly entitlements that can be spent in the camp’s supermarket through the use of an authorization code. Reportedly, the programme has contributed to a reduction by 98% of the bank costs entailed by the use of a financial service provider.

This is a noteworthy achievement considering that organizations working in international relief can lose up to 3.5% of each aid transaction to various fees and costs and that an estimated 30% of all development funds do not reach their intended recipients because of third-party theft or mismanagement.

At least six other UN agencies including the UN Office for Project Services (UNOPS), the UN Development Programme (UNDP), the UN Children’s Fund (UNICEF), UN Women, the UN High Commissioner for Refugees (UNHCR) and the UN Development Group (UNDG), are now considering Blockchain applications that could help support international assistance, particularly supply chain management tools, self-auditing of payments, identity management and data storage.

The potential of Blockchain technology in the field of migration and asylum affairs should therefore be fully explored.

At the European Union (EU) level, while a Blockchain task force has been established by the European Parliament to assess the ways in which the technology could be used to provide digital identities to refugees, and while the European Commission has recently launched a call for project proposals to examine the potential of Blockchain in a range of sectors, little focus has been placed so far on EU assistance in the field of migration and asylum, both within the EU and in third countries with which the EU has negotiated migration partnership agreements.

This is despite the fact that the use of Blockchain in a number of major programme interventions in the field of migration and asylum could help improve not only their cost-efficiency but also, at least as importantly, their degree of transparency and accountability. This at a time when media and civil society organizations exercise increased scrutiny over the quality and ethical standards of such interventions.

In Europe, for example, Blockchain could help administer the EU Asylum, Migration and Integration Fund (AMIF), both in terms of transferring funds from the European Commission to the eligible NGOs in the Member States and in terms of project managers then reporting on spending. This would help alleviate many of the recurrent challenges faced by NGOs in managing funds in line with stringent EU regulations.

As crucially, Blockchain would have the potential to increase transparency and accountability in the channeling and spending of EU funds in third countries, particularly under the Partnership Framework and other recent schemes to prevent irregular migration to Europe.

A case in point is the administration of EU aid in response to the refugee emergency in Greece where, reportedly, there continues to be insufficient oversight of the full range of commitments and outcomes of large EU-funded investments, particularly in the housing sector. Another example is the set of recent programme interventions in Libya, where a growing number of incidents of human rights abuses and financial mismanagement are being brought to light….(More)”.

Smarter New York City: How City Agencies Innovate

Curated on Posted on by Stefaan Verhulst

Book edited by André Corrêa d’Almeida: “Innovation is often presented as being in the exclusive domain of the private sector. Yet despite widespread perceptions of public-sector inefficiency, government agencies have much to teach us about how technological and social advances occur. Improving governance at the municipal level is critical to the future of the twenty-first-century city, from environmental sustainability to education, economic development, public health, and beyond. In this age of acceleration and massive migration of people into cities around the world, this book explains how innovation from within city agencies and administrations makes urban systems smarter and shapes life in New York City.
Using a series of case studies, Smarter New York City describes the drivers and constraints behind urban innovation, including leadership and organization; networks and interagency collaboration; institutional context; technology and real-time data collection; responsiveness and decision making; and results and impact. Cases include residential organic-waste collection, an NYPD program that identifies the sound of gunshots in real time, and the Vision Zero attempt to end traffic casualties, among others. Challenging the usefulness of a tech-centric view of urban innovation, Smarter New York City brings together a multidisciplinary and integrated perspective to imagine new possibilities from within city agencies, with practical lessons for city officials, urban planners, policy makers, civil society, and potential private-sector partners….(More)”.

Small Data for Big Impact

Curated on Posted on by Stefaan Verhulst

Liz Luckett at the Stanford Social Innovation Review: “As an investor in data-driven companies, I’ve been thinking a lot about my grandfather—a baker, a small business owner, and, I now realize, a pioneering data scientist. Without much more than pencil, paper, and extraordinarily deep knowledge of his customers in Washington Heights, Manhattan, he bought, sold, and managed inventory while also managing risk. His community was poor, but his business prospered. This was not because of what we celebrate today as the power and predictive promise of big data, but rather because of what I call small data: nuanced market insights that come through regular and trusted interactions.

Big data takes into account volumes of information from largely electronic sources—such as credit cards, pay stubs, test scores—and segments people into groups. As a result, people participating in the formalized economy benefit from big data. But people who are paid in cash and have no recognized accolades, such as higher education, are left out. Small data captures those insights to address this market failure. My grandfather, for example, had critical customer information he carefully gathered over the years: who could pay now, who needed a few days more, and which tabs to close. If he had access to a big data algorithm, it likely would have told him all his clients were unlikely to repay him, based on the fact that they were low income (vs. high income) and low education level (vs. college degree). Today, I worry that in our enthusiasm for big data and aggregated predictions, we often lose the critical insights we can gain from small data, because we don’t collect it. In the process, we are missing vital opportunities to both make money and create economic empowerment.

We won’t solve this problem of big data by returning to my grandfather’s shop floor. What we need is more and better data—a small data movement to supply vital missing links in marketplaces and supply chains the world over. What are the proxies that allow large companies to discern whom among the low income are good customers in the absence of a shopkeeper? At The Social Entrepreneurs’ Fund (TSEF), we are profitably investing in a new breed of data company: enterprises that are intentionally and responsibly serving low-income communities, and generating new and unique insights about the behavior of individuals in the process. The value of the small data they collect is becoming increasingly useful to other partners, including corporations who are willing to pay for it. It is a kind of dual market opportunity that for the first time makes it economically advantageous for these companies to reach the poor. We are betting on small data to transform opportunities and quality of life for the underserved, tap into markets that were once seen as too risky or too costly to reach, and earn significant returns for investors….(More)”.

How Universities Are Tackling Society’s Grand Challenges

Curated on Posted on by Stefaan Verhulst

Michelle Popowitz and Cristin Dorgelo in Scientific American: “…Universities embarking on Grand Challenge efforts are traversing new terrain—they are making commitments about research deliverables rather than simply committing to invest in efforts related to a particular subject. To mitigate risk, the universities that have entered this space are informally consulting with others regarding effective strategies, but the entire community would benefit from a more formal structure for identifying and sharing “what works.” To address this need, the new Community of Practice for University-Led Grand Challenges—launched at the October 2017 workshop—aims to provide peer support to leaders of university Grand Challenge programs, and to accelerate the adoption of Grand Challenge approaches at more universities supported by cross-sector partnerships.

The university community has identified extensive opportunities for collaboration on these Grand Challenge programs with other sectors:

  • Philanthropy can support the development of new Grand Challenge programs at more universities by establishing planning and administration grant programs, convening experts, and providing funding support for documenting these models through white papers and other publications and for evaluation of these programs over time.
  • Relevant associations and professional development organizations can host learning sessions about Grand Challenges for university leaders and professionals.
  • Companies can collaborate with universities on Grand Challenges research, act as sponsors and hosts for university-led programs and activities, and offer leaders, experts, and other personnel for volunteer advisory roles and tours of duties at universities.
  • Federal, State, and local governments and elected officials can provide support for collaboration among government agencies and offices and the research community on Grand Challenges.

Today’s global society faces pressing, complex challenges across many domains—including health, environment, and social justice. Science (including social sciences), technology, the arts, and humanities have critical roles to play in addressing these challenges and building a bright and prosperous future. Universities are hubs for discovery, building new knowledge, and changing understanding of the world. The public values the role universities play in education; yet as a sector, universities are less effective at highlighting their roles as the catalysts of new industries, homes for the fundamental science that leads to new treatments and products, or sources of the evidence on which policy decisions should be made.

By coming together as universities, collaborating with partners, and aiming for ambitious goals to address problems that might seem unsolvable, universities can show commitment to their communities and become beacons of hope….(More)”.

The Tyranny of Metrics

Curated on Posted on by Stefaan Verhulst

Book by Jerry Z. Muller on “How the obsession with quantifying human performance threatens our schools, medical care, businesses, and government…

Today, organizations of all kinds are ruled by the belief that the path to success is quantifying human performance, publicizing the results, and dividing up the rewards based on the numbers. But in our zeal to instill the evaluation process with scientific rigor, we’ve gone from measuring performance to fixating on measuring itself. The result is a tyranny of metrics that threatens the quality of our lives and most important institutions. In this timely and powerful book, Jerry Muller uncovers the damage our obsession with metrics is causing–and shows how we can begin to fix the problem.

Filled with examples from education, medicine, business and finance, government, the police and military, and philanthropy and foreign aid, this brief and accessible book explains why the seemingly irresistible pressure to quantify performance distorts and distracts, whether by encouraging “gaming the stats” or “teaching to the test.” That’s because what can and does get measured is not always worth measuring, may not be what we really want to know, and may draw effort away from the things we care about. Along the way, we learn why paying for measured performance doesn’t work, why surgical scorecards may increase deaths, and much more. But metrics can be good when used as a complement to—rather than a replacement for—judgment based on personal experience, and Muller also gives examples of when metrics have been beneficial…(More)”.

How AI Could Help the Public Sector

Curated on Posted on by Stefaan Verhulst

Emma Martinho-Truswell in the Harvard Business Review: “A public school teacher grading papers faster is a small example of the wide-ranging benefits that artificial intelligence could bring to the public sector. A.I could be used to make government agencies more efficient, to improve the job satisfaction of public servants, and to increase the quality of services offered. Talent and motivation are wasted doing routine tasks when they could be doing more creative ones.

Applications of artificial intelligence to the public sector are broad and growing, with early experiments taking place around the world. In addition to education, public servants are using AI to help them make welfare payments and immigration decisions, detect fraud, plan new infrastructure projects, answer citizen queries, adjudicate bail hearings, triage health care cases, and establish drone paths.  The decisions we are making now will shape the impact of artificial intelligence on these and other government functions. Which tasks will be handed over to machines? And how should governments spend the labor time saved by artificial intelligence?

So far, the most promising applications of artificial intelligence use machine learning, in which a computer program learns and improves its own answers to a question by creating and iterating algorithms from a collection of data. This data is often in enormous quantities and from many sources, and a machine learning algorithm can find new connections among data that humans might not have expected. IBM’s Watson, for example, is a treatment recommendation-bot, sometimes finding treatments that human doctors might not have considered or known about.

Machine learning program may be better, cheaper, faster, or more accurate than humans at tasks that involve lots of data, complicated calculations, or repetitive tasks with clear rules. Those in public service, and in many other big organizations, may recognize part of their job in that description. The very fact that government workers are often following a set of rules — a policy or set of procedures — already presents many opportunities for automation.

To be useful, a machine learning program does not need to be better than a human in every case. In my work, we expect that much of the “low hanging fruit” of government use of machine learning will be as a first line of analysis or decision-making. Human judgment will then be critical to interpret results, manage harder cases, or hear appeals.

When the work of public servants can be done in less time, a government might reduce its staff numbers, and return money saved to taxpayers — and I am sure that some governments will pursue that option. But it’s not necessarily the one I would recommend. Governments could instead choose to invest in the quality of its services. They can re-employ workers’ time towards more rewarding work that requires lateral thinking, empathy, and creativity — all things at which humans continue to outperform even the most sophisticated AI program….(More)”.

The Assault on Reason

Curated on Posted on by Stefaan Verhulst

Zia Haider Rahman at the New York Review of Books: “Albert Einstein was awarded a Nobel Prize not for his work on relativity, but for his explanation of the photoelectric effect. Both results, and others of note, were published in 1905, his annus mirabilis. The prize was denied him for well over a decade, with the Nobel Committee maintaining that relativity was yet unproven. Philosophers of science, most notably Karl Popper, have argued that for a theory to be regarded as properly scientific it must be capable of being contradicted by observation. In other words, it must yield falsifiable predictions—predictions that could, in principle, be shown to be wrong. On the basis of his theory, Einstein predicted that starlight was being deflected by the sun by specified degrees. This was a prediction that was, in principle, capable of being wrong and therefore capable of falsifying relativity. The physicist offered signs others could look for that would lend credibility to his theory—or refute it. Evidence eventually came from the work of Arthur Eddington and the arrival of instruments that could make sufficiently fine measurements, though Einstein’s Nobel medal would elude him for two more years because of gathering anti-Semitism in Europe.

Mathematics, so often lumped together with the sciences, actually adheres to an entirely different standard. A mathematical theorem never submits itself to hypothesis testing, never needs an experiment to support its validity. Once described to me as an education in thinking without the encumbrance of facts, mathematics is unlike the sciences in that no empirical finding can ever shift a mathematical theorem by one iota; it is true forever. Mathematical reasoning is a given, something commonly understood and shared by all mathematicians, because mathematical reasoning is, fundamentally, no more than logical reasoning, a thing universally shared. My own study of mathematics has left me with a deep respect for the distinction between relevance and irrelevance in making a reasoned argument.

These are the gold standards of human intellectual progress. Society, however, has to deal with wildly contested facts. We live in a post-truth world, by some accounts, in which facts are willfully bent to serve political ends. If the forty-fifth president is to be believed, Christmas has apparently been restored to the White House. Never mind the contradictory videos of the forty-fourth president and his family celebrating the holiday.

But there is nothing particularly new about this distorting. In his landmark work, Public Opinion, published in 1922, the formidable American journalist, Walter Lippmann reflected on the functions of the press:

That the manufacture of consent is capable of great refinements no one, I think, denies. The process by which public opinions arise is certainly no less intricate than it has appeared in these pages, and the opportunities for manipulation open to anyone who understands the process are plain enough.… as a result of psychological research, coupled with the modern means of communication, the practice of democracy has turned a corner. A revolution is taking place, infinitely more significant than any shifting of economic power.… Under the impact of propaganda, not necessarily in the sinister meaning of the word alone, the old constants of our thinking have become variables. It is no longer possible, for example, to believe in the original dogma of democracy; that the knowledge needed for the management of human affairs comes up spontaneously from the human heart. Where we act on that theory we expose ourselves to self-deception, and to forms of persuasion that we cannot verify. It has been demonstrated that we cannot rely upon intuition, conscience, or the accidents of casual opinion if we are to deal with the world beyond our reach.

Everyone is entitled to his own opinion, but not his own facts, as United States Senator Daniel Patrick Moynihan was fond of saying. None of us is in a position, however, to verify all the facts presented to us. Somewhere, we each draw a line and say on this I will defer to so-and-so or such-and-such. We have only so many hours in the day. Besides, we acknowledge that some matters lie outside our expertise or even our capacity to comprehend. Doctors and lawyers make their livings on such basis.

But it is not merely facts that are under assault in the polarized politics of the US, the UK, and other nations twisting in the winds of what some call populism. There is also a troubling assault on reason….(More)”.

The Future Computed: Artificial Intelligence and its role in society

Curated on Posted on by Stefaan Verhulst

Brad Smith at the Microsoft Blog: “Today Microsoft is releasing a new book, The Future Computed: Artificial Intelligence and its role in society. The two of us have written the foreword for the book, and our teams collaborated to write its contents. As the title suggests, the book provides our perspective on where AI technology is going and the new societal issues it has raised.

On a personal level, our work on the foreword provided an opportunity to step back and think about how much technology has changed our lives over the past two decades and to consider the changes that are likely to come over the next 20 years. In 1998, we both worked at Microsoft, but on opposite sides of the globe. While we lived on separate continents and in quite different cultures, we shared similar experiences and daily routines which were managed by manual planning and movement. Twenty years later, we take for granted the digital world that was once the stuff of science fiction.

Technology – including mobile devices and cloud computing – has fundamentally changed the way we consume news, plan our day, communicate, shop and interact with our family, friends and colleagues. Two decades from now, what will our world look like? At Microsoft, we imagine that artificial intelligence will help us do more with one of our most precious commodities: time. By 2038, personal digital assistants will be trained to anticipate our needs, help manage our schedule, prepare us for meetings, assist as we plan our social lives, reply to and route communications, and drive cars.

Beyond our personal lives, AI will enable breakthrough advances in areas like healthcare, agriculture, education and transportation. It’s already happening in impressive ways.

But as we’ve witnessed over the past 20 years, new technology also inevitably raises complex questions and broad societal concerns. As we look to a future powered by a partnership between computers and humans, it’s important that we address these challenges head on.

How do we ensure that AI is designed and used responsibly? How do we establish ethical principles to protect people? How should we govern its use? And how will AI impact employment and jobs?

To answer these tough questions, technologists will need to work closely with government, academia, business, civil society and other stakeholders. At Microsoft, we’ve identified six ethical principles – fairness, reliability and safety, privacy and security, inclusivity, transparency, and accountability – to guide the cross-disciplinary development and use of artificial intelligence. The better we understand these or similar issues — and the more technology developers and users can share best practices to address them — the better served the world will be as we contemplate societal rules to govern AI.

We must also pay attention to AI’s impact on workers. What jobs will AI eliminate? What jobs will it create? If there has been one constant over 250 years of technological change, it has been the ongoing impact of technology on jobs — the creation of new jobs, the elimination of existing jobs and the evolution of job tasks and content. This too is certain to continue.

Some key conclusions are emerging….

The Future Computed is available here and additional content related to the book can be found here.”