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

Henry Loh, a research analyst at Aberdeen Standard Investments in Singapore, said the government had acted to reduce moral hazard, or indiscriminate risk-taking in the belief that the state would guard against losses. Manju Dalal, WSJ, "China’s Blowout Bond Sale Is Little Comfort to Junk Issuers," 18 Oct. 2018 While there is no reason to expect cheating—or at least not more than usual for OPEC—the 27% rally in benchmark U.S. crude futures from the pre-Christmas bottom through Friday creates a different moral hazard. Spencer Jakab, WSJ, "Oil Market Will Test OPEC’s Newfound Credibility," 18 Jan. 2019 This sort of arbitrary custom breeds serious moral hazard in Chinese markets. Jacky Wong, WSJ, "What Xiaomi’s Dropped Listing Says About Chinese Markets," 20 June 2018 Science squabbles notwithstanding, both sides of the moral hazard argument agree that negative emissions technologies like those in development at Carbon Engineering should be pursued with vigor. Robbie Gonzalez, WIRED, "The Potential Pitfalls of Sucking Carbon From the Atmosphere," 13 June 2018 Stephen Lynch, also a Democrat, from Massachusetts, said that by failing to provide public accountability and thus lumping the good with the bad, the review created moral hazard. The Economist, "Other American banks may have misbehaved as Wells Fargo did. Which ones?," 14 June 2018 European powers were not totally ignorant of the moral hazards involved. Longreads, "Kara Walker’s Subtlety," 28 Feb. 2018 The prospect of a massive American intervention almost certainly extended and exacerbated the Syrian war and also created a moral hazard by allowing rebels to overestimate their chance of success. Michael Brendan Dougherty, National Review, "What Are We Still Doing in Syria?," 25 Jan. 2018 This moral hazard is aggravated by the market’s unhealthy concentration. The Economist, "Carillion’s collapse raises awkward questions about contracting out," 18 Jan. 2018

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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Statistics for moral hazard

Last Updated

30 May 2019

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The first known use of moral hazard was in 1881

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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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something desired as essential

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