Tag Archives: Moral hazard

Moral Hazard i NFL. Nå jubles det for å tape flest kamper for å få velge spiller først i Draft 2012

La meg gi deg litt mer informasjon. I NFL er det det dårligste laget etter en sesong som ligger an til å velge først fra kullet med nye spillere fra universitetene i USA. Dvs. at jo dårligere du er, jo bedre spillere kan du velge etter sesongen er ferdig. Ett eksempel på dette er Detriot Lions, som for 2 sesonger siden tapte alle, alle, sine kamper (0-16), og fikk dermed velge den beste spilleren i Draft-runden, quarterback Matthew Stanford. I år har løvene vunnet alle sine fem første kamper i årets sesong.

Den spilleren som ligger an til å bli plukket først i 2012 er Andrew Luck, quarterback for Stanford University. Og det er her moral hazard kommer inn:

That fans are rooting for a collapse — especially less than one-third of the way through the season — speaks to the appeal of Luck, who has consumed the N.F.L. even as he has flown somewhat under the college radar this season. The Cardinal will not play a highly anticipated game until Nov. 12 against Oregon. But even in what is expected to be a strong 2012 quarterback draft class, the ardor for Luck is not surprising. He would have almost certainly been the top pick if he had left Stanford last season. The fan campaign seems to have sprung up organically, before he announced that he would stay in college.

“I am aware of it,” said Luck, who becomes awkward and uncomfortable whenever the N.F.L. is brought up. “A couple of guys told me about it. I think it’s stupid. Simply put.”

Dumt?

Ja.

Det er en grunn til at tilhengere sitter i setene og ikke står på banen.

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«Hvis du eier motorsykkeldrosjer i Afrika vil du at sjåførene gjør så liten innsats som mulig» Hva?

Motorcycle taxi
Slike eksempler som du nå skal få høre om finnes i mange varianter på denne kloden. Her er eksempelet fra drosjemiljøet i Afrika. La meg summere opp hva som skjer her.

Motorsykkelmarkedet i Afrika kan beskrives som ett forhold mellom eiere av syklene og sjåførene som opererer de daglig. Hva er spesielt med dette forholdet? Jo, 1) eierne kan ikke observere hvor mange turer som sjåføren produserer og eieren kan derfor ikke basere lønn på innsats. Det er ganske enkelt å bare lyve om antall turer på den måten. 2) Innsatsen til sjåføren sliter på utstyret som eieren eier, og derfor slites utstyret ned per tur.

Dette betyr at eieren ønsker at sjåføren bruker motorsykkelen så lite som mulig, mens han vil at sjåføren skal jobbe for han og ikke si opp.

Henger du fortsatt med forklarer Chris Blattman videre:

The industrial organization of motorbike taxis in Africa: «

In the motorcycle taxi market in Sub-Saharan Africa, the relation between the owners and the drivers is characterized by a principal agent problem with the following features: (i) the principal cannot observe the final output of the agent and therefore cannot condition his wage on it. (ii) The high effort from the agent depreciates the asset. These two features (i) and (ii) imply that the principal ideally wants the agent to exert as little effort as possible, while still leasing the asset from him.

The problem with low effort implementation is that the asset will not generate enough revenue. I analysis the contractual arrangements between the owners and the drivers in this market and use a survey data to address the determinant of the contracts and their implications. I show that trust between the principal and the agent can lead to the choice of a socially sub-optimal contract because of moral hazard problems.

A paper from Moussa Blimpo, who also made some of the most thoughtful blog comments on the Mamdani and Mbeki tirades against the world’s actions in Cote D’Ivoire (here and here).

The other contracting problem in motorbike taxis: how much does a foreigner pay? The key thing: never ask the price. Everyone knows the price, and if you have to ask, it’s like wearing a sign that says ‘Please charge me five times the going rate.’

My strategy is to just ask someone the rate structure in advance, then pay the driver slightly more. But the key is to self-assuredly hand the money over at the end and say thank you. You’ll get smiles and no more arguments.

(Some of you may say, ‘You are so insane as to take motorbike taxis in Africa?’ to which I reply, (1) chill out, and (2) you have not seen Kampala car traffic. Cars get snarled so long in traffic there are now shoe salesmen by the roadside. You have time to try on many, many pairs.)

(Via Chris Blattman.)

Nå vet du hva du skal gjøre hvis du skal ha taxi i Afrika. Eller sko.

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Helseøkonomi | Moral Hazard – Hva er det? En primer for alle.

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Vi følger The Incidental Economist (Austin Frakt) og hans introduksjon til helseøkonomi. Alle begrepene han tar for seg gjelder også for den norske sektoren, men i mindre grad. Vi har andre problemer enn USA, men du vet, ‘knowledge is power’: Hva er moral hazard?

Simply put: Moral hazard:

Simply put is an ongoing series. See the introduction for an explanation of the series and the full list of topics that have been or may be covered. Feel free to suggest other topics in that post.

We buy all things that are worth more to us than we spend (of our own money) to obtain them.

When someone else is paying the bill (or some of it), we’ll buy even more stuff because the amount of our own money we must spend to obtain it is even further below the value of the stuff. This is intuitive. The less something costs us, the more we’ll buy.

That’s why we use more health care when we’re insured. Some people call this ‘moral hazard,’ but that’s not quite right. I’ll explain.

In the background, no matter who is paying for health care, we each have a valuation of it, a measure of its worth in dollars. That is, for any health care service, there is an amount of our own money we’d spend for it and no more. At some price we’d rather have the cash.

If it weren’t so impractical health insurance (public or private) could function this way. For every health event the insurance company (or government program) could give us a wad of cash. Then we could decide if the health care we could buy for that amount was worth it. We could decide to keep the cash. There is some amount of money for which you are indifferent to having the cash or having your sprained ankle examined. That’s your valuation.

The way insurance actually works is that we either see the doctor or get nothing (no cash). If we see the doctor our insurer pays something to the doctor for it, and we pay a little too (a copayment–I’m ignoring deductibles for the moment). Is the insurer spending more than the amount we’d accept to not see the doctor? That is, is the insurer paying a price above our valuation of the health care we receive?

If so, that’s a ‘moral hazard’ effect. We’re using care that costs more than we think it is worth. That’s what moral hazard means, when applied to health care. In some sense the insurer is getting ripped off. It could have made us happy by spending less, giving us an amount of cash that is one penny above what we think the health care they paid much more for is worth. This reflects an information asymmetry–something we know that the insurer doesn’t. It doesn’t know our private valuation.

Very often people say that all care that is used by the insured that wouldn’t otherwise be used in the absence of insurance is ‘moral hazard.’ But that’s not right. That would imply that care you couldn’t afford without insurance but think is a great value is moral hazard care. It means that nearly all the care that people with low incomes on Medicaid receive is moral hazard care, yet people who are wealthy who receive the same procedures through private insurance (that they could afford anyway) is not moral hazard care.

In other words, moral hazard is sometimes confused with an income effect and income transfers (or the effect of in-kind transfers). It really has nothing to do with it. Moral hazard is really about the insurer (public or private) overpaying for care because it lacks the information to do otherwise.

Another way ‘moral hazard’ is abused is by conflating this ‘overpayment effect’ with ‘care that doesn’t improve health.’ The two concepts are totally unrelated. There may be, and likely are, health improvements derived from care that costs more than you or I would pay out-of-pocket. Just because I’d forgo the care for a wad of cash lower in value than the cost of that care doesn’t mean the care isn’t good for my health. Not all of it may be, but some of it likely is.

The real problem as it pertains to health is not ‘moral hazard’ per se, but distinguishing between care that is health improving and care that is not. Even if moral hazard did not exist–because the insurer paid exactly what we would out-of-pocket for the care–that problem would remain.

Further Reading

Newhouse J. Pricing the Priceless: A Health Care Conundrum. Chapter 1.

Nyman J. The Theory of Demand for Health Insurance.

Santerre R and Neun S. Health Economics: Theories, Insights, and Industries Studies. Chapter 6.

(Via The Incidental Economist (Posts).)

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