Relapse Rate

AAA

DEFINITION of 'Relapse Rate'

The rate of re-offending or re-conviction in a target group. The relapse rate is of special significance in social impact bonds (SIBs), which seek to achieve better social outcomes and pass on a significant part of the savings made to investors. The relapse rate may be applicable in referring to social impact bonds in areas such as criminal justice or drug rehabilitation, but may not be wholly accurate when referring to SIBs in other areas such as child protection or adolescent intervention.

INVESTOPEDIA EXPLAINS'Relapse Rate'

The impact of the relapse rate can be best understood by studying one of the first social impact bonds to be issued, which was an SIB issued by Peterborough Prison in the United Kingdom in 2011.


In this SIB, the relapse or re-conviction rate of prisoners released from Peterborough will be compared with the relapse rates of a control group of prisoners over six years. If Peterborough's relapse rate is below the relapse rate of the control group by a certain defined percentage, the SIB investors receive an increasing rate of return that is directly proportional to the difference in relapse rates between the two groups.

The higher return to the investors is made possible by Peterborough Prison's willingness to pass on to the SIB investors a portion of the considerable cost savings achieved through a significantly lower relapse rate of its prisoners.

RELATED TERMS
  1. Social Impact Bond - SIB

    A contract with the public sector or governing authority, whereby ...
  2. Green Economics

    A methodology of economics that supports the harmonious interaction ...
  3. Ethical Investing

    Using one's ethical principles as the main filter for securities ...
  4. Socially Responsible Investment ...

    An investment that is considered socially responsible because ...
  5. Horizontal Merger

    A merger occurring between companies in the same industry. Horizontal ...
  6. Factor Market

    A marketplace for the services of a factor of production.
Related Articles
  1. Insurance

    Green Investors Get Heard

    Find out how to make your portfolio and the companies in it greener.
  2. Mutual Funds & ETFs

    Change The World One Investment At A Time

    Socially responsible investing allows you to express your political views in an unlikely way.
  3. Personal Finance

    Go Green With Socially Responsible Investing

    Find out how morals and ethics can bring you a surprising return.
  4. Mutual Funds & ETFs

    Socially (Ir)responsible Mutual Funds

    Not concerned about being an ethical investor? Maybe "sinful stocks" have a place in your portfolio.
  5. Mutual Funds & ETFs

    Socially Responsible Mutual Funds

    It is possible to avoid unethical investments and still profit from mutual funds. Find out how!
  6. Mutual Funds & ETFs

    Socially Responsible Stocks: Do Good Deeds Punish Profits?

    Socially responsible investing doesn't mean accepting lower returns. Find out why squeaky-clean stocks shine as investments.
  7. Options & Futures

    Socially Responsible Investing Vs. Sin Stocks

    Can your principles make you richer or poorer? Find out if it pays pick your portfolio based on ethics.
  8. Economics

    The True Unemployment Rate: U6 Vs. U3

    Learn how to distinguish between the U-3 and U-6 unemployment rates, and explore which rate provides a truer picture of unemployment.
  9. Economics

    An America with Donald Trump as President

    Take a closer look at some of policy proposals from Republican presidential candidate Donald Trump, and what a future with President Trump might look like.
  10. Stock Analysis

    The Top Performing Airlines Right Now

    Learn about the airline industry and its top-performing companies. Understand these top-emerging airlines and why they have taken more market share.
RELATED FAQS
  1. What is the difference between marginal utility and marginal value?

    Depending on the context, marginal utility and marginal value can describe the same thing. The key word for each is "marginal," ... Read Full Answer >>
  2. In economics, what is an index number?

    Economists often make comparisons between sets of data across time. For example, a macroeconomist might want to measure changes ... Read Full Answer >>
  3. What role does the agency problem play in the modern Health Care industry?

    Agency problems vary from health care system to health care system, and not all economists agree on the degree and desirability ... Read Full Answer >>
  4. What is the utility function and how is it calculated?

    In economics, utility function is an important concept that measures preferences over a set of goods and services. Utility ... Read Full Answer >>
  5. What role do transaction costs play in marginal utility analysis?

    The term "transaction costs" is much broader in economics than it is in general finance lingo. The traditional definition ... Read Full Answer >>
  6. Which is more important to a nation's economy, the balance of trade or the balance ...

    There is no question the composition of a country's balance of payments is more important than its balance of trade. This ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Dog And Pony Show

    A colloquial term that generally refers to a presentation or seminar to market new products or services to potential buyers.
  2. Topless Meeting

    A meeting in which participants are not allowed to use laptops. A topless meeting organizer can also ban the use of smartphones, ...
  3. Hedging Transaction

    A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging ...
  4. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  5. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  6. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!