Monday, April 13, 2009

Moral Hazard everywhere

First Sam Peltzman discovered that seat belts caused more accidents. Then other researchers followed his lead:
Researchers have found that improved parachute rip cords did not reduce the number of sky-diving accidents; overconfident sky divers hit the silk too late. The number of flooding deaths in the United States has hardly changed in 100 years despite the construction of stronger levees in flood plains; people moved onto the flood plains, in part because of subsidized flood insurance and federal disaster relief. Studies suggest that workers who wear back-support belts try to lift heavier loads and that children who wear protective sports equipment engage in rougher play. Forest rangers say wilderness hikers take greater risks if they know that a trained rescue squad is on call. Public health officials cite evidence that enhanced HIV treatment can lead to riskier sexual behavior.


  1. Does having an MBA result in more arrogant behavior at work, because MBA's feel they can easily pick up a new job?