While drones provide a level of safety for US military members, they also create an incentive problem for the military. Now that it is easier (and safer) to strike foreign targets, the US uses drones to attach more targets than they would if they hadn’t been invented. This unintended consequence has resulted in thousands of civilian deaths and an increased reliance on deadly technology. This is also another example of a moral hazard in which economic agents take increasingly risky actions because they have been safeguarded against the risk.
Friends — Joey Loses His Insurance
Joey finds out that he hasn’t been working enough lately, so the Screen Actors Guild is canceling his insurance. He’s quick to point out the moral hazard involved in insurance because now he has to be more careful!
Later in the episode, he comes down with a hernia after working out. Since his insurance has lapsed, he doesn’t have enough money to go to the doctor to get it looked out. Luckily, Joey is able to find a part as “dying man” and he ends up getting his health insurance back.
Thanks to Isabel Ruiz for the clip suggestion!
The Daily Show — Moral Hazard
Moral hazard occurs when a party that is protected from risk behaves differently from the way it would behave if it were fully exposed to the risk. Here, the last line is a perfect example of moral hazard, when Aasif Mandvi says, “Hey man! You can get drunk and have a great time and it doesn’t matter ‘cuz you’ve got health insurance!” Now students can fall off of keg stands and get hurt but that’s ok, they have health insurance now!
Thanks to James Tierney for the clip and the description!
The Simpsons — Sirloin-A-Lot Challenge
This clips includes a few different economics concepts rolled in to one. The overarching theme is that of consumer choice where Homer appears to experience diminishing returns while trying to eat a 16 pound steak. He’s competing against a previous eating contest winner, who dies at the end from eating too much steak.
In the middle of the clip, Marge asks Dr. Hibbert if that much steak is healthy and Dr. Hibbert exhibits a bit of the principle-agent problem where his interests now align with eating competitions because he owns a portion of the restaurant. The good doctor tells her not to worry because they have a new heimlich machine, which decreases their need to focus on choking hazards.
Always Sunny — The Cost of Health Care
After Dee has a heart attack, she heads to the hospital only to find out that she doesn’t have insurance because her dad canceled the policy when they were younger. Mac and Charlie are confused that people have to pay to stay in a hospital because they think of it like a public good similar to police and fire protection, which is nonexcludable.
Frank shows up to get a full body health scan because he’s been having a bit too much fun. This line alone is a great clip for teaching moral hazard when it comes to healthcare.
Friends — The One Where Joey Loses his Health Insurance
Joey loses his health insurance from SAG because he hasn’t been working enough jobs. He laments to Chandler that he now has to be more careful until he gets enough interviews to qualify again. The next day Joey gets a hernia, but won’t go to the hospital because he can’t afford. He tries to do a few different auditions with the hernia, but none of them really work in his favor.
The Simpsons — King-Size Homer
In this episode, at work Homer is required to participate in an exercise class. He learns that if he is considered disabled that he will not have to participate in the class. He looks up ways to be considered disabled and finds that being over 300 lbs. makes him disabled. He’s now incentivized to become obese and not have to participate in the class when most people try to avoid becoming overweight.
Thanks to Brooke Bauman for the clip!
Spongebob Squarpants — Obesity
It takes Squidward some time to try a Krabby Patty, but once he does he finds out that he loves them. He gets so addicted that he eventually locks himself away and starts overeating. He can’t control himself, and once Spongebob comes knocking, it’s too late. The Krabby Patties have gone to Squidward’s thighs and then he blows up.
Thanks to Savannah Barry for the clip recommendation!
Always Sunny — Smoking in the Mailroom
Charlie decides to start smoking in the mailroom because it’s a stressful job and the cigarettes help him calm down. He rationalizes it that it’s okay to do something so risky because he has health insurance. In economic terms, health insurance creates a moral hazard because Charlie is only smoking because he knows he has insurance and he wouldn’t be as risky without it.
Fried Green Tomatoes — I Have More Insurance
Evelyn Couch (Kathy Bates) is waiting on a parking spot, but a car jumps in front of her. Her parking lot rage gets a bit heater and she decides to drive into the parked car since she assumes she has more insurance than they do. If she didn’t have that insurance, she probably wouldn’t have been so reckless.