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 Negative-emissions technologies carry with them a moral hazard: the temptation to keep emitting CO2 as usual and to use DAC as a crutch. Matt Simon, Wired, "Is It Time for an Emergency Rollout of Carbon-Eating Machines?," 26 Jan. 2021 The path of forgiving student loans through executive action is fraught with legal peril and moral hazard. Thomas W. Miller Jr., National Review, "Slow the Roll in the Student-Loan Market," 15 Dec. 2020 Republicans were right to hold the line, not only because of the moral hazard of rewarding profligate governments, but also because states and cities are poor channels for swift economic aid. The Editors, National Review, "A Necessary Relief Bill," 22 Dec. 2020 With any luck, Congress will repurpose this money to finance its latest Covid spending blowout so at least that political moral hazard won’t be available to the Biden Treasury to steer for political purposes via the Fed. The Editorial Board, WSJ, "The Fed’s Stimulus Paradox," 16 Dec. 2020 Some analysts have argued, however, that canceling student debt will create a problem of moral hazard. Kate Padgett Walsh, Quartz, "The morality of canceling student debt," 3 Dec. 2020 These actions create the true moral hazard where debt is concerned, insulating businesses from the downsides of their recklessness by insuring the public picks up the tab. Astra Taylor, The New Yorker, "How the Biden Administration Can Free Americans from Student Debt," 23 Nov. 2020 Of course, our cities and states were not responsible for creating the pandemic, making the idea that favorable lending to them would cause a moral hazard a fundamentally misplaced notion. Mark Engler, The New Republic, "The Fed Could Help Cash-Strapped Cities and States. Mnuchin Has Other Ideas.," 20 Nov. 2020 Could there be a moral hazard lurking for the author? Elaine Blair, The New York Review of Books, "Making Order of the Breakdown," 24 Sep. 2020

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.

See More

First Known Use of moral hazard

1881, in the meaning defined above

Keep scrolling for more

Learn More about moral hazard

Time Traveler for moral hazard

Time Traveler

The first known use of moral hazard was in 1881

See more words from the same year

Statistics for moral hazard

Last Updated

5 Feb 2021

Cite this Entry

“Moral hazard.” Dictionary, Merriam-Webster, Accessed 6 Mar. 2021.

Style: MLA
MLA Chicago APA Merriam-Webster

Keep scrolling for more

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 Encyclopedia article about moral hazard

Comments on moral hazard

What made you want to look up moral hazard? Please tell us where you read or heard it (including the quote, if possible).


Test Your Vocabulary

Who Knew?

True or False

Test your knowledge - and maybe learn something along the way.

 AlphaBear 2

Spell words. Make bears.

Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!