The valuation of social impact bonds: An introductory perspective with the Peterborough SIB

Social impact bonds (SIBs) are financial assets whose objective is to attract investors to fund social programs by providing them an incentive if the project meets its predefined targets. This article aimed at initiating a reflection on the development of a pricing method for this kind of financial assets. After having defined SIBs in the first section, I will present, in the second one, an existing SIB (called Peterborough SIB) in financial terms. Afterwards, the last section offered an introductory perspective on the potential development of a Wang transformation based pricing method applied to this Peterborough SIB. By using this statistical operator as a statistical technique for converting objective probabilities (past observations) into subjective estimates of these probabilities, this paper offers the first conceptual framework integrating the uncertainty related to the feasibility of SIBS. (C) 2015 Elsevier B.V. All rights reserved.