Hacker News Reader

Comment by hguant | Hacker News Reader

It's important to note that "moral hazard", while not quite a term of art, has a specific meaning in economics that isn't associated with ethics or morality.

The quick google definitions: "a lack of incentive to guard against risk where one is protected from its consequences"

Wikipedia: https://en.wikipedia.org/wiki/Moral_hazard

View on HN

He's using it correctly here though: the risk is that if you provide housing to the lowest rung while making the next group down pay $1.5K/bedroom/month, some of the next group down will decide that they would rather become part of the "lowest rung" group rather than pay the money. It's like the phenomena of people committing petty crimes so that they can get a warm bed and food in jail.

Your example illustrates to me why moral hazard isn't the best title for this. We should provide free housing to people in need so they don't do things like commit a crime to go to jail.

You mean like all those millionaires who decide to become thousandaires so they don't pay more taxes? Give me a break.

First, that is a terrible analogy.

If I'm interpreting the ops statement correctly, this is more analogous to a system where post-tax income decreases with rising income instead.

The moral hazard is for those renting: the free housing is equivalent to an insurance payout.

A renter can do risky things (like lose their job) because they are protected from the consequences of not being able to pay the rent. They get housed anyway.

Being able to take risks can be seen as a good thing, too. It may help class mobility.

Reply on news.ycombinator.com