The sociology of value creation: the interplay of measurement and public value formation

Value is not a static concept – it is continuously shaped by both active and inadvertent choices. ‘Value creation’ is in fact a demanding process of defining what is valuable and making value tangible and manageable. As such, processes of defining, measuring and using ‘value’ in decision-making all influence what is valued.

In this blog, Mathilde addresses three key questions building on her research about impact bond (IB) implementation in France, Colombia and Chile and on the session on the measurement of public value at the Social Outcomes Conference 2022: How do we define value? How do we operationalise value? And how do we use value assessments in decision-making processes? Each section below gives practical tips for avoiding common pitfalls when considering value.

How do we define value?

There are multiple types of value, namely economic, financial, social, environmental, cultural, and moral values. Defining value requires combining different sets of values. In particular, the ‘value for money’ concept helps capture the multiplicity of values created from public investment, relying on monetary proxies. Some researchers argued that the IB value proposition entangles financial, political, moral and technical dimensions, as do impact investing principles.

However, combining values can raise difficult questions, such as whether economic value should be prioritised over environmental and social value, answers to which may vary across time, place, and context. Different stakeholders – i.e., the state, taxpayers, public service providers and beneficiaries – may define and prioritise these values in a competing manner, using different means of measuring it (e.g., balance sheets, KPIs, financial ratios, etc.). For example, taxpayers might want to reduce taxes while social providers seek more public support.

In fact, the way value is framed depends on who defines public value, and who is expected to benefit from it. For instance, the Public Value Framework has been established in New South Wales, Australia to assess the value created from the use of Crown Land. As Nandita Das from the New South Wales Government explained, the valuation framework acknowledges that public value is an ongoing process that involves several stakeholders and competing values. Public value, she concluded, is not only about reconciling values, but also about seeking how public value should be delivered and distributed.

How do we operationalise value?

Implementing value measurement into concrete accounting systems may pose technical challenges involving data infrastructures. The Director of Thames Valley Violence Reduction Unit, Superintendent Stan Gilmour, exposed the challenges and opportunities associated with developing efficient violence reduction policy thanks to data integration. Their data integration project involves a network of various organisations in order to inform and understand the risk factors that cause violence, which will ultimately support the implementation of preventative policy based on social impact measurement.

However, Stan mentioned the resistance of some organisations to share data, underlining the cultural challenges involved in the implementation of more collaborative and outcome-based policy. He also warned about the ethical issue of “the missed use of data.” He underlined the importance of reflecting on which data might be missing and which groups of people might be, therefore, misrepresented (e.g., women).

How do we use value assessments in decision-making processes?

Value assessments play an important role in informing and legitimising decision-making. For instance, the GO Lab-CIPFA Value for Money Toolkit provides tools to assess the 4Es (economy, efficiency, effectiveness and equity) of public programs and help decision-making. In IBs, assessments of public savings and economic benefits for the state are used as a justification for public authorities to engage with projects.

However, it is important to be aware that value data is never perfectly neutral and objective. As Stan Gilmour’s claim suggested, value measurement offers and promotes a certain representation of the world. Value assessments can even (often inadvertently) provoke what they aim to describe. This phenomenon is called “performativity”: it means that the reality tends to stick to the indicators and objectives that are set, and therefore, is limited to the specific theories of change included in these objectives. In IBs, I identified that outcome indicators create a form of anxiety that affects the relationship between social workers and service users. In some cases, social operators develop various means to make sure that programme beneficiaries can achieve the target objectives (e.g., employment). These practices include “cherry picking”, i.e., selecting the population that is most likely to achieve the results, thereby excluding populations with more complex needs.

In conclusion, decision-makers should be aware of how the process of valuing social and economic outcomes shapes value and the actual activities aimed at producing value. The risks of “missed use of data” and “performativity” certainly call for sound information system design, but also and crucially, for constant attention to the fact that public value is always devised from a certain point of view – coming from specific human beings but also technical devices.