moral hazard


Definition of moral hazard

: the possibility of loss to an insurance company arising from the character or circumstances of the insured

Examples of moral hazard in a Sentence

Recent Examples on the Web The new approaches illustrate the difficulty in trying to reduce moral hazard -- the perception that there’s an implicit government guarantee behind banks -- without triggering public panic. Washington Post, "China’s Shifting Approach to Bank Bailouts," 26 Nov. 2019 Policy programs involving loan cancellation almost always lead to moral hazard. Preston Cooper, National Review, "Elizabeth Warren’s Bad Student-Debt Plan," 26 Sep. 2019 That solved immediate problems but created moral hazard. The Economist, "Indian banks’ share prices are being hammered," 10 Oct. 2019 In its desperation to create more tech stars, South Korea’s government bears some of the blame for spreading moral hazard in the nascent local hedge-fund industry. Washington Post, "Hedge Funds Hurt by Seoul’s Too-Good-to-Fail Bonds," 21 Oct. 2019 This moral hazard is just one of the weaknesses of India’s financial architecture thrown into stark relief by PMC’s troubles. The Economist, "Indian banks’ share prices are being hammered," 10 Oct. 2019 Often, politicians combine moral hazard with budgetary arguments to oppose broader naloxone distribution. Freida Blostein, The Conversation, "This overdose-reversal medicine could reduce opioid deaths – so why don’t more people carry it?," 18 Oct. 2019 The managers had created a moral hazard, driving up insurance costs and potentially triggering a public relations and legal nightmare. Mike Isaac, New York Times, "How Uber Got Lost," 24 Aug. 2019 In effect, the government was creating a moral hazard by rewarding reckless behavior and then serving as the primary insurer when catastrophe struck. Longreads, "The Geography of Risk," 26 Sep. 2017

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'moral hazard.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of moral hazard

1881, in the meaning defined above

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The first known use of moral hazard was in 1881

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Statistics for moral hazard

Last Updated

7 Feb 2020

Cite this Entry

“Moral hazard.” Dictionary, Merriam-Webster, Accessed 18 Feb. 2020.

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More Definitions for moral hazard

moral hazard


Legal Definition of moral hazard

1 : the possibility of loss to an insurance company (as by arson) arising from the character or circumstances of the insured deductibles decrease moral hazard
2 : the likelihood of investors to take greater risks because of the knowledge that losses incurred as a result of those risks will be covered by another (as a government)

More from Merriam-Webster on moral hazard

Rhyming Dictionary: Words that rhyme with moral hazard Encyclopedia article about moral hazard

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