My Daughter and I Had the Talk -- About Moral Hazard

EXT. BIKE LANE — AFTERNOON

A fortyish father, bundled up in bountiful fall layers, ferries his six-year-old daughter to the bookstore in their overpriced, overengineered Dutch cargo bike.

Drivers and bikers and pedestrians swarm the streets like whizzing bullets on a battlefield.

While waiting at a busy intersection a fellow biker dangerously and haphazardly sails past the stoplight and into the hectic thoroughfare.

FATHER

(Agitated)

Wow. That was not safe at all. That man made a terrible decision.

DAUGHTER

(Indifferent)

Well, at least he was wearing a helmet.

FATHER

(Excited for a new entry in “The talks”)

That’s true. And that was a good choice. But in economics there’s a concept called moral hazard. Sometimes, when people think they’re protected from harm, they erroneously develop a sense of invincibility, and overcompensate by taking excessive risk.

This is one of the problems with wearing helmets in American football. Because the players think their heads are protected, they often use their helmets — and thus heads — as bludgeoning instruments, which unfortunately causes even more injuries.

This same problem can happen with—

DAUGHTER

(Impatiently)

Bike helmets. Because that man was wearing a helmet he was riding really unsafe because he thought he was protected — yeah, yeah, yeah, I got it already, Dad.

FATHER

(Lamenting his lost entry in “The talks”)

Okay.

Good.