Advertisement

Moral Hazard in the Welfare State

  • Lars Söderström
Conference paper

Abstract

There is no generally accepted definition of moral hazard. Here I shall refer to certain (but not all) behavioral effects related to provisions in the form of insurance, that is, plans for risk sharing where one party (the insurer) agrees to carry some part or the whole of a loss that the other party (the insured) might face as a result of a specified risk, for example illness. In particular, I shall look at insurance provisions in the welfare state. Sandmo (1991) and Barr (1992), among others, have drawn attention to moral hazard as a potentially large problem in the welfare state.1

Keywords

Welfare State Risk Premium Moral Hazard Demand Curve Insurance Policy 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

Reference

  1. Arrow, K. J. 1970. Essays in the Theory of Risk-bearing. Amsterdam: North-Holland.Google Scholar
  2. Atkinson, A. B., and J. Micklewright. 1991. “Unemployment Compensation and Labor Market Transitions. A Critical Review.” Journal of Economic Literature 29: 1679–1727.Google Scholar
  3. Barr, N. 1992. “Economic Theory and the Welfare State: A Survey and Interpretation.” Journal of Economic Literature 30: 741–803.Google Scholar
  4. Binmore, K. 1994. Game Theory and the Social Contract. Volume 1: Playing Fair. Cambridge, Mass.: MIT Press.Google Scholar
  5. Bird, E.J. 1995. “Culture and Social Policy: Does the Welfare State Need New Tools?” International Institute of Public Finance 51st Congress, Lisbon, Portugal, August 21–24 (mimeo).Google Scholar
  6. Borch, K. H. 1990. Economics of Insurance Advanced Textbooks in Economics, Volume 29. Amsterdam: North-Holland.Google Scholar
  7. Dinsdale, W. A. 1949. Elements of Insurance London: Pitman and Sons.Google Scholar
  8. Dover, V. 1957. A Handbook to Marine Insurance, Fifth Edition. London: Witherby.Google Scholar
  9. Dréze, J. H. 1987. Essays on Economic Decisions under Uncertainty. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  10. Helpman, E., and J.-J. Laifont. 1975. “On Moral Hazard in General Equilibrium Theory.” Journal of Economic Theory 15: 8–23.CrossRefGoogle Scholar
  11. Henrekson, M. et al. 1992. Bruk och Missbruk av Sjukförsäkringen. Kristianstad: SNS förlag (Studier & Debatt).Google Scholar
  12. Johnson, G., and R. Layard. 1986. “The Natural Rate of Unemployment. Explanation and Policy.” In: O. Ashenfelter and R. Layard (eds.), The Handbook of Labor Economics, Vol. 2, pp. 921–999. Amsterdam: North-Holland.Google Scholar
  13. Keeler, E. B. et al. 1988. The Demandfor Medical Treatment in the Health Insurance Experiment. R-3454-HHS. Santa Monica: Rand Corporation.Google Scholar
  14. Laffont, J.-J. 1989. The Economics of Uncertainty and Information. Cambridge, Mass.: MIT Press.Google Scholar
  15. Laffont, J.-J., and J. Tirole. 1993. A Theory of Incentives in Procurement and Regulation. Cambridge, Mass.: MIT Press.Google Scholar
  16. Lindbeck, A. 1995. “Welfare State Disincentives with Endogenous Habits and Norms.” Research Centre for Economic Policy Research Memorandum 9505. Rotterdam: Erasmus University Rotterdam.Google Scholar
  17. Manning, W.G. et al. 1987. “Health Insurance and the Demand for Medical Care. Evidence from a Randomized Experiment.” American Economic Review 77: 251–277.Google Scholar
  18. Marquis, M.S., and M.R. Holmer. 1986. Choice Uncertainty and the Demand for Health Insurance. N-2516-HHS. Santa Monica: Rand Corporation.Google Scholar
  19. Moffitt, R. 1992. “Incentive Effects of the U.S. Welfare System. A Review.” Journal of Economic Literature 30: 1–61.Google Scholar
  20. Müller, H. H., and R. Brammertz. 1986. “Moral Hazard.” The Geneva Papers on Risk and Insurance 11: 130–144.Google Scholar
  21. North, D.C. 1990. Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press.Google Scholar
  22. OECD. 1991. OECD Employment Outlook. July 1991. Paris: OECD.Google Scholar
  23. Page, R. H. 1957. “Underwriting.” In: Mickelbacher and Roos (eds.), Multiple-Line Insurers. New York, London: McGraw-Hill.Google Scholar
  24. Pauly, M.V. 1968. “The Economics of Moral Hazard.” American Economic Review 58: 531–537.Google Scholar
  25. Putnam, R.D. 1993. Making Democracy Work. Civic Traditions in Modern Italy. Princeton, N.J.: Princeton University Press.Google Scholar
  26. Sandmo, A. 1991. “Economists and the Welfare State.” European Economic Review 35: 213–239.CrossRefGoogle Scholar
  27. Scott, J. 1971. Internalization of Norms. Englewood-Cliffs, N.J.: Prentice-Hall.Google Scholar
  28. Stiglitz, J.E. 1983. “Risk, Incentives and Insurance. The Pure Theory of Moral Hazard.” The Geneva Papers on Risk and Insurance. 26: 4–33.Google Scholar
  29. Ullrich, C.G. 1995. “Die Auswirkungen des Moral Hazard auf die GKV-Versicherten. Akzeptanzverlust oder Handlungsoption?” Arbeitspapier Nr. 7/ 95. Universität Bremen: Zentrum für Sozialpolitik.Google Scholar
  30. Winter, W.D. 1952. Marine Insurance: Its Principles and Practice. Third Edition. New York, London: McGraw-Hill.Google Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 1997

Authors and Affiliations

  • Lars Söderström

There are no affiliations available

Personalised recommendations