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Home » Discuss » Archives » General Discussion (1/22-2007 thru 12/14/2010) Donate to DU
jhasp Donating Member (66 posts) Send PM | Profile | Ignore Tue Mar-27-07 09:39 AM
Response to Reply #85
146. Kind of...
Moral hazard meaning that if I don't have to pay for the results of my actions, I will do what I please without considering the costs. I gave the example of Savings and Loans because their depository insurance was not risk adjusted, so they made very risky loans (which they make a higher profit on) that eventually went bad and the FSLIC program did not have enough funds for the bailout. To give you a personal example, I was about 80 lbs. overweight prior to getting a life insurance policy about 4 years ago. I found out that if I was able to get life insurance, it would be extremely expensive due to my weight, so I took 5 months and dropped that 80 lbs (which I have been able, thankfully, to keep off). Risk adjusted insurance premiums are a good motivator (but certainly not the only motivator) for living a healthy lifestyle.


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