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A well known feature of insurance systems is that they reduce incentives to avoid loss. This feature is known as moral hazard. Unfortunately the term has normative overtones this is particularly unfortunate in the present application to industrial injury insurance since the conclusions can lead to very different welfare conclusions. The term has, in fact, been used in the normative sense to describe behaviour which is considered morally improper or even illegal l. However, a more useful interpretation for current purposes simply describes the behavioural effects of insurance cover and their effect on loss experience. This paper examines, in the neutral sense, the disincentive effects of the National Insurance injuries scheme on absence from work.
International Journal of Social Economics – Emerald Publishing
Published: Jul 1, 1980
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