Moral hazard

Civil societies set aside a common pool of resources to help those with whom chance has dealt harshly. Frequently we allow access to these common resources when bad luck is assisted by foolishness and lack of foresight. Sometimes we may even help ourselves to a few of those common assets since others are doing so and they are public goods, the cost of which is shared and has already been paid. Moral hazard is the questionable ethical practice of increasing opportunity for individual gain while shifting risk for loss to the group. Bailout is an example. What makes moral hazard so widespread and difficult to manage is that it is easier for individuals to see their advantage than it is for groups to see theirs. Runaway American healthcare costs can be explained in these terms. Cheating, overtreatment, commercialism, and other moral problems in dentistry can be traced to the interaction between opportunistic individual behavior and permissive group responses common in moral hazard.