Taking the experience from Norrköping municipality, which together with Umeå was the first municipality in Sweden to introduce social investment funds, as the starting point, Lars Hultkrantz presents a model for how social investment funds can be designed.
The objective of social investments is to counteract that the left hand does not know what the right hand is doing and also to counteract short-term perspectives, according to LARS HULTKRANTZ, Professor of Economics at Örebro University School of Business, who has written two reports on this subject on behalf of SNS. You can read more about the second report, Evaluating Social Investments, here.
The objective of social investments is to make it possible to follow up the long-term effects of a measure and analyse if and how an early measure might pay off in the long run in the form of a decrease in human suffering and lower costs for society. Some kind of social investment fund does currently exist in 64 municipalities and two county councils and another 75 municipalities plan to introduce social investment funds.
Taking the experience from Norrköping municipality, which together with Umeå was the first municipality in Sweden to introduce social investment funds, as the starting point, Lars Hultkrantz presents a model for how social investment funds can be designed in his own research reports. He also provides recommendations for a national strategy.
Some of the challenges for social investments are that the effects only become visible after a couple of years and that it is not always possible to know what will be the result of a particular measure. There also exist challenges in the structure for the organisation and governance of the municipalities.
– Municipalities are basically governed using one-year budgets, where money is allocated to district administrative units which, in turn, redistribute to particular activities. This entails short-term perspectives and means that the left hand does not know what the right hand is doing, according to Lars Hultkrantz.
Evaluating the effects of social measures is very important but is surprisingly seldom done, according to Lars Hultkrantz.
– The fact is that we have very little knowledge about this. We seldom know the costs of social measures or what their short-term effects are. In principle, we never know what are the short-term effects or what future costs that can be avoided by taking a certain measure. This differs from clinical work where there is a strong tradition of evaluating effects, according to Lars Hultkrantz.
With the right kind of support, municipalities might become better at analysing the long-term effects of social efforts and get a better basis for decisions on the use of municipal funds. Lars Hultkrantz would like a central support function for the evaluations of the effects of social investments that are made by the municipalities, in the same way that municipalities get assistance with, for example, environmental protection and traffic.
The reports were commented on by SUSANNE ACKUM, Fiscal Counselor at the Ministry of Finance and LARS STJERNKVIST, Chairman of the Municipal Executive Board of Norrköping municipality.
– I was very pleased with and inspired by reading about the initiative in Norrköping. Norrköping shows that a well-structured thought-model is helpful in prioritising scarce resources. I think that we can learn much from this, says Susanne Ackum.
Lars Stjernkvist told the audience about the background of the initiative with social investment funds in Norrköping:
– Unemployment is high in Norrköping and we analysed the costs for unemployment in economic terms. It would be cynical not to consider how to decrease the human suffering that corresponds to the costs.
Both are positive to the suggestion by Lars Hultkrantz for a central support unit for evaluations of social investments.
– How to make municipalities renounce resources today for profitability in 20, 30 years? Knowledge is needed about these measures and it should be possible for a central unit to compile and analyse the effects, according to Susanne Ackum.
The papers Social Investments in Sweden: Facts and Lessons and Evaluating Social Investments are written by Lars Hultkrantz, Professor of Economics, Örebro University School of Business. The papers are part of the SNS research project Investments in Equal Chances in Life that spans several years.