January 2020

Green Moral Hazards

By Gernot Wagner & Daniel Zizzamia

mor·al haz·ard [ˈmôrəl ˈhazərd, noun]

Lack of incentive to guard against risk where one is protected from its consequences.

The formal definition of “moral hazards” applies squarely to insurance. Health insurance is a classic example, and one where moral hazards are pervasive. Equating moral hazards with “moral failings,” they are often used by some on the political right as arguments against government-provided health care.

Environmentalists have their own form of moral hazards, typically applied to new technologies fixing problems without the need for deeper structural and behavioral reforms: band-aid solutions in the form of “technofixes.”... Read more about Green Moral Hazards