[gred]

> There are no moral hazards when it comes to social welfare programs.

This is a wild statement. Of course people take advantage of welfare programs. Of course welfare programs have unintended consequences and sometimes encourage immoral or anti-social behavior. That doesn't mean they're all bad or that they need to be completely eliminated, but leading with this obvious falsehood made it very hard to read the rest of your comment.

https://www.justice.gov/archives/opa/pr/covid-19-fraud-enfor...

[camgunz]

This is exactly why I stake out such a strong position, so that positions like this poke their heads up. Individuals getting benefits when they're ineligible accounts for tiny amounts of the total fraud in these programs. Time after time we discover at least one of two things:

- The effort/cost required to reduce fraud usually overshadows the cost of the fraud itself and also dramatically reduces the benefits of the program. There were 640,000 SNAP fraud investigations in 2014 [0]. If they cost $1,000 each that's $640m, and I bet they cost more!

- The vast majority of fraud is either criminal, retailer, or both [1]

The "moral hazard" angle of these programs is wildly overplayed. You don't hear anything about:

- criminal trafficking

- retailer fraud

- program benefits

There's political reasons for this, but it doesn't matter. Our brainrot on social programs is intense.

> https://www.justice.gov/archives/opa/pr/covid-19-fraud-enfor...

Looking at the fact sheet linked from that release [2], that stat that jumps out to me is 3,500 individuals charged totaling $1.4b in stolen CARES Act funds (this isn't a direct stat, but the numbers only get worse if we presume even more money from this and other programs was stolen), which is $400k/individual charged. It doesn't really seem possible for a person or household to have bilked the government for $400k under the individual benefits of the CARES Act [3]. We're looking at white collar fraud here, again a thing you never hear anything about.

Finally, we should view some levels of fraud as indicative of broader social ills. For example the number of blue collar jobs has greatly diminished just in a single lifetime [4]. Could that be responsible for the dramatic increase in Social Security Disability claims (yes)?

[0]: https://www.cbpp.org/snap-combating-fraud-and-improving-prog...

[1]: https://www.everycrsreport.com/reports/R45147.html

[2]: https://www.justice.gov/coronavirus/media/1347156/dl?inline

[3]: https://en.wikipedia.org/wiki/CARES_Act#Relief_to_individual...

[4]: https://cepr.net/publications/the-decline-of-blue-collar-job...

[hgomersall]

As the lauded private sector are well aware, the optimal amount of fraud is non zero:

https://www.bitsaboutmoney.com/archive/optimal-amount-of-fra...

[ggandv]

I wonder if optimizing for votes, as is the day to day business of most policy makers, gets you to the same place as optimizing for profits like in the private sector? If not, studying that could be one way to improve the public sector output. Not that shareholders vote, on average, but you get the idea.

[mech9879876]

You swept the issue of fraudulent social security disability claims under the rug. It seems apparent to me that your attitude toward individual level accountability is one that denies agency of the individual and ascribes their moral failures as a result of societal-level problems. After all, there is no moral hazard when individuals have no moral agency to begin with.

[camgunz]

I posted about it in a different little branch: https://news.ycombinator.com/item?id=43903848

TL;DR: the average disability recipient age has hovered ~50 (stddev 1.54 years) since 1960. The theory of "baby boomers are a huge generation, they got old and US health care sucks ass" is far more parsimonious than your theory of individual accountability, which has to explain why every generation suddenly becomes fraudulent/immoral/unaccountable at the exact same point in their lives.

[mech9879876]

Aggregating statistics regarding age has very little explanatory value in regards to fraud and is a non sequitir. I would not be surprised if the average age of a convicted insurance fraudster has remained relatively constant over time either.

The example in linked materials of 1 in 4 adults in Hale County receiving disability payments is a clear example of a situation where individuals and healthcare providers have both contributed to widescale fraud. This is an obvious case where moral hazard is present and you continue to deny it.

[camgunz]

This is my claim: the narrative that these programs incentivize and facilitate freeloading is false. Let's use your example: NPR's exploration of Hale County [0], which I'm not sure you've read/listened to.

The first interview [1] is exactly what I've written: baby boomers got older and more disabled, and economic conditions pushed people into disability. Quote: "consider this: Since the economy began its slow, slow recovery in late 2009, we've been averaging about 150,000 new jobs created per month. But in that same period, almost 250,000 people have been applying for disability every month." What do you want these people to do, manifest new jobs?

The second interview [2] outlines how the definition of disability has expanded over the years and the way the legal profession has exploited that to increase the number and success rate of disability claims. Again, not freeloading.

The third interview [3] describes how welfare-to-work legislation put a higher burden of the welfare onto states, so it's actually in their financial benefit to move people off of welfare and onto Social Security disability--so much so in fact that they pay people to do it. Quote: "PCG estimates it'll save Missouri about $80 million with all the people that will be getting onto disability and off of welfare".

Interviews 4 [4] and 5 [5] describe how people and families get trapped in these systems where if they do too well they'll experience extreme financial hardship. Quote: "a lot of the letters that we got from people responding to the stories were people saying, I'm one of those 14 million people on disability and I want to work. But I get health insurance on disability and what job am I going to find that accommodates my disability, it also gives me health insurance."

If your model of this problem is "there's a bunch of people too lazy to work who are freeloading on the public dole" you will be unsuccessful at solving it, because your model is wrong.

[0]: https://www.npr.org/series/196621208/unfit-for-work-the-star...

[1]: https://www.npr.org/2013/03/22/175072446/millions-of-america...

[2]: https://www.npr.org/2013/03/26/175396983/expanded-definition...

[3]: https://www.npr.org/2013/03/27/175502085/moving-people-from-...

[4]: https://www.npr.org/2013/03/28/175619112/kids-may-stay-on-di...

[5]: https://www.npr.org/2013/03/29/175722025/americans-on-disabi...

[mech9879876]

Your method of argument relies on lumping all persons into one category. The annoying detail about designing public policy is that policy changes happen on the margin, and it is the marginal cases where moral hazard presents itself first. If you continue to boundlessly extend your empathy for everyone that walks into their doctor's office to anybody that says they have back pain, you will clearly have fraud. And Hale County is clearly a case where this fraud is broadly present. You have presented your argument in the best way to try to lump the fraudsters in with the rest of the empathy-deserving recipients.

When Hale County has 1 in 4 adults on disability, it is beyond evident that the system is not working as intended. Yes, it is distinctly clear that some of those adults should be getting jobs. Your question "What do you want these people to do, manifest new jobs?" implies that this must be some unthinkably cruel thing to believe.

>If your model of this problem is "there's a bunch of people too lazy to work who are freeloading on the public dole" you will be unsuccessful at solving it, because your model is wrong.

Even if freeloading is unsolvable, the moral hazard exists. My primary claim prior to this comment has been limited to the fact that the moral hazard is present. Your argumentative strategy to claim that because the problem isn't solvable, it must not exist, strikes me as dishonest.