What a social investment ‘litmus test’ must address: A response to Plavgo and Hemerijck

Abstract

Throughout the past decade, the notion that social policy should be applied as a tool to enhance the productive capacity of families, rather than to smooth consumption, has gained considerable traction under the moniker of social investment (SI). Against lingering critiques of the usefulness of SI research, Plavgo and Hemerijck primarily present bivariate, cross-sectional correlations of national-level outcomes to provide what they call a ‘social investment litmus test’. They conclude that SI policies are effective at achieving ‘positive returns in employment and poverty mitigation’. They also present evidence to suggest that ‘passive’ income supports are not effective at reducing poverty and promoting employment. Given the importance of their claims and the pre-eminence of SI in recent social policy literature, we feel compelled to respond and clarify that the authors’ findings do not support their conclusions. In doing so, we (1) review the central claims from the authors’ study, (2) provide evidence as to why the authors’ findings do not support their claims of a ‘social investment litmus test’, and (3) propose a path forward for a more critical assessment of the performance of policies labelled as SI.