Being good pays

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A scheme that can help keep youngsters out of jail comes to America

IN A small classroom four teenage boys laugh and roll their eyes at each other’s wisecracks. The instructor, sometimes speaking in Spanish, encourages them to think about their futures. For his family, one says, „I want to buy a big-ass house„. Another wants to work with cars. A third thinks a family reunion would be great. The classroom is on Rikers Island, New York City’s biggest jail. The teens are participating in the Adolescent Behavioral Learning Experience (ABLE) programme, which helps them focus on personal responsibility through cognitive behaviour therapy. The programme’s goal is to cut the re-incarceration rate among the youngsters, and it is funded using social impact bonds (SIB).

A SIB is an experimental financing method which connects financially-stressed municipalities with private investors to fund public projects at no initial cost to taxpayers. Also known as pay-for-success contracts, these schemes began in Britain’s Peterborough prison in 2010. Unlike most funding for social projects, which tend to pay for inputs, SIBs rely on results. New York is the first city in America to try one. Unlike in Britain, which had do-gooder sorts finance its social projects, New York has Goldman Sachs, a Wall Street institution. It is funding the programme to the tune of $9.6m over four years. This is not a charitable donation.

More details: Economist.com

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