Moral Hazard

Insurance - especially insurance via the government - is a favorite bugaboo of libertarians and various other wingnuts. To the extent that they have an intellectual argument, it is based on the concept of "moral hazard." As an economist I know explained the concept to his mother, the moral hazard argument is that you are "less likely to step in front of a bus if you know you aren't insured for the expected medical expenses." Thus, the argument goes, you are more likely to engage in dangerous behaviors - smoke, drink excessively, become obese, or step in front of a bus - if you have medical insurance, so such insurance actually encourages unhealthy behaviors.

I find it hard to believe than anybody takes this argument very seriously, though economists apparently do.

See Wikipedia for more plausible applications of the principle of moral hazard.

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