The term ‘moral hazard’ is surely one of the most controversial
in the field of health economics. Although it would seem that
the connotation must be pejorative – immorality is certainly
implied if one is prey to the hazard (Dembe and Boden,
2000) – it is commonly used to describe a much more benign
situation in which a person with health insurance will use
more services. Indeed, as Pauly (1968) pointed out long ago,
‘‘the response of seeking more medical care with insurance
than in its absence is a result not of moral perfidy, but of
rational economic behavior’’ (p. 535).
In reality, though, health economists have