A Society of Moral Hazards

Moral Hazard – a term used in economics says that if you bail someone out of a problem then a question is raised about what incentive they have to not do it again. In fact the hazard then becomes an enabler. E.g In the insurance industry it is where coverage against a loss might increase the risk-taking behavior of the insured.

It’s a term that has been used to decide the circumstances which created the current global financial crisis, with questions being asked about whether government bailouts are, in fact, creating even more moral hazards. What about the rest of society?


We seem to have built a whole society on moral hazards. Despite all of the evidence and research we have at our disposal now, parents are enabling kids to not have to be financially response-able for themselves, or allowing kids to go out – not considering they may be going to rainbow, or water parties, magazines are enabling a culture of child over-sophistication, football coaches and managers are enabling players to behave very badly, the alcohol industry is enabling young women to behave very badly. Governments are enabling developers to behave appallingly by allowing them to pay lipservice to the impact they have on everyone else and the environment.

As educators we too have to ask ourselves, what moral harards are we creating? What are we doing which is enabling students to behave in ways which are ultimately dangerous to themselves or to other. Keeping them at school for longer and longer periods of time rather than enabling them to grow up is perhaps one factor that needs to be reconsidered as very bad policy.