Moral Hazard in the Welfare State

  • Lars Söderström
Conference paper


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


Welfare State Risk Premium Moral Hazard Demand Curve Insurance Policy 
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© Springer-Verlag Berlin Heidelberg 1997

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  • Lars Söderström

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