Moral Hazard: A Question of Morality?

Abstract

Economists use the term moral hazard to describe the tendency for insurance plans to encourage behavior that increases the risk of insured loss. Numerous economic studies have examined moral hazard effects in workers' compensation. Many of these have focused on the supposed propensity of workers to exercise less caution or to file more claims in response to increases in workers' compensation benefit levels. Although many authorities insist that moral hazard is a value-neutral concept, there are often pejorative connotations associated with contemporary discussions of moral hazard that intentionally or unintentionally disparage the motives of workers and undermine public support for workers' compensation programs. This article critically examines that literature and explores the conceptual underpinnings of economists' claims that employee moral hazard is rampant in workers' compensation. We examine the historical roots of moral hazard and its role in recent economic analyses of workers' compensation, consider the practical and ethical implications of that discourse, and offer suggestions for a truly value-neutral approach that would describe the system more fairly and accurately.

Preserving workers' dignity in workers' compensation systems: An international perspective

“…Some of these studies may be used to suggest that compensation itself is bad for the worker's health, yet they have no information on the process to which workers are subjected in an adversarial context . This approach is built on the premise of ''moral hazard'' [Dembe and Boden, 2000;Campolieti, 2002], that access to benefits will prolong duration of disability, implicitly, or explicitly suggesting malingering, and as such contributes to the stigmatization of workers' compensation claimants. Recent research warns against the use of such studies in the redesign of compensation systems [Spearing and Connelly, 2011].…”

Identifying Moral Hazard in Car Insurance Contracts

“…Employer-dependent car 1 See works by Abbring, Chiappori and Zavadil (2008), Ceccarini (2009), Cohen and Dehejia (2004), and Schneider (2008). 2 The term "moral hazard" was …rst introduced in 18 th century England to describe how insurance could result in lower incentives to protect oneself against the risk of accidents (Dembe & Boden, 2000). Arrow (1963) was among the …rst economists to describe the change in incentives caused by insurance.…”

Betétbiztosítás és erkölcsi kockázat Magyarországon

“…Az erkölcsi kockázat fogalma a XIX. század végén jelent meg a biztosítás szóhasználatában, egy időben a társadalombiztosítási rendszerek bevezetésével Európában és az Egyesült Államokban (Dembe-Boden [2000]). …”