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A History of the Term “Moral Hazard”
Author(s) -
Rowell David,
Connelly Luke B.
Publication year - 2012
Publication title -
journal of risk and insurance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.055
H-Index - 63
eISSN - 1539-6975
pISSN - 0022-4367
DOI - 10.1111/j.1539-6975.2011.01448.x
Subject(s) - moral hazard , morale hazard , morality , normative , positive economics , salient , term (time) , rhetorical question , hazard , contrast (vision) , economics , tone (literature) , focus (optics) , sociology , actuarial science , political science , epistemology , philosophy , law , insurance policy , incentive , key person insurance , microeconomics , auto insurance risk selection , linguistics , artificial intelligence , chemistry , computer science , optics , quantum mechanics , physics , organic chemistry
The term “moral hazard” when interpreted literally has a strong rhetorical tone, which has been used by stakeholders to influence public attitudes to insurance. In contrast, economists have treated moral hazard as an idiom that has little, if anything, to do with morality. This article traces the genesis of moral hazard, by identifying salient changes in economic thought, which are identified within the medieval theological and probability literatures. The focus then shifts to compare and contrast the predominantly, normative conception of moral hazard found within the insurance‐industry literature with the largely positive interpretations found within the economic literature.