[matt4077]

It’s a somewhat stupid example, because nobody endangers their own life just because they have health insurance.

Smoking instead of reckless driving may make it (slightly) more understandable.

[mspecter]

Sure, though, to be pedantic, a common example of moral hazard is the increased likelihood of driving recklessly in the presence of mandatory seat belts. See https://web.stanford.edu/~leinav/pubs/RESTAT2003.pdf

[matt4077]

That’s not a moral hazard. The word doesn’t even appear in the paper. It’s just an example of somewhat efficiently choosing a different point on the risk/reward continuum when the payoffs change.

A moral hazard is choosing a selfish course of action with negative external effects.