Moral Hazard and "Plan B"

[pvn]

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An example: Suppose I'm walking past David Sklansky's winter residence after a particularly heavy blizzard has iced over his sidewalk. Further suppose that I'm aware that David is extremely risk averse and is willing to accept the -EV of extra liability insurance to reduce the volatility that a lawsuit may bring should someone slip on his sidewalk. With these conditions, I have extremely little incentive to watch my step as I walk past his house. Slipping in this instance is at least as good of an outcome for me due to heavy insurance compensation as not slipping.

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So in this case, in addition to the person contemplating an "accidental" slip, Mr. Sklansky and his insurance agent have reasons to be concerned.

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This idea translates very well to the FDA's recent approval of the non prescription "Plan B" morning after pill. I hypothesize that, due to the introduction of non-prescription "Plan B," Americans have less incentive to practice responsible sexual behavior (which I define ideally as abstinence before marriage, and more practically as protected sex within a monogamous relationship). Because "Plan B" offers an escape hatch for those who have unprotected sex, moral hazard will take effect, and irresponsible sexual behavior (at least how I've defined it in this post) will increase.

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In this case, nobody other than the people having sex have any reason to be concerned. Mind your own business, busybody.

[luckyme]

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Thoughts?

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No, I don't think they are. They seem more like burka-based politics dressed up as thoughts, but not a bad try.

[hmkpoker]

Does an increased quality of birth control give people more incentive to have sex? Yes.

Should that be considered immoral? No.

[llayner]

If you take the economics argument (since moral hazard is a payoff incentive tilted towards desiring a negative outcome on the part of the insurance holder), one would consider the prices that result out of the consequences of the action. If condoms are, on average $1 a piece, the pill is $10-15 per month (either through insurance or planned parenthood) and one dose of Plan B is $30, the clear choice is to not use Plan B as a birth control but rather, the same way its used now as a last resort (before the last last resorts). Its not in the best interest to use Plan B as the first choice - its not even second.

[BluffTHIS!]

Bigdaddy,

Very good post.

I think an interesting economic side aspect of this abortion drug will be to see how it effects the economic viability of abortion clinics, most of which are run as for-profit enterprises. If in the short run if makes for less pregnancies being aborted at later stages as seems likely, then it might cause a lot of clinics to close. Then since a lot of OBGYNs aren't willing to perform same, later stage abortions could be much harder to obtain. And then if such an effect indeed occurs, the overall number of abortions by any means might actually decrease since the morning after pill assumes a woman acting promptly, a measure of prudence not implicit in the same person being willing to have unprotected sex. This should be able to be determined after a few years if the percentage of doses used to sold can be ascertained and combined with other late stage numbers to compare to total numbers prior to the drug's release.

[Utah]

interesting post. However, for there to be moral hazard one needs to assume that sexual decisions are chosen rationally. I do not not believe that to be the case as sexual decisions are made instinctually.

The higher the degree of instinctual decision making the lower the risk of moral hazard. Additionally, the higher the degree of instinctual decision making the more valuable the pill is.

[vhawk01]

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Bigdaddy,

Very good post.

I think an interesting economic side aspect of this abortion drug will be to see how it effects the economic viability of abortion clinics, most of which are run as for-profit enterprises. If in the short run if makes for less pregnancies being aborted at later stages as seems likely, then it might cause a lot of clinics to close. Then since a lot of OBGYNs aren't willing to perform same, later stage abortions could be much harder to obtain. And then if such an effect indeed occurs, the overall number of abortions by any means might actually decrease since the morning after pill assumes a woman acting promptly, a measure of prudence not implicit in the same person being willing to have unprotected sex. This should be able to be determined after a few years if the percentage of doses used to sold can be ascertained and combined with other late stage numbers to compare to total numbers prior to the drug's release.

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Well, if you get to call it an abortion pill, I get to call it peppermint Tic-Tacs. But anyhow...you should really be more worried about this new research. If this is truly feasible, then the difference between the skin cells you shed every day and these precious embryos continues to shrink. I mean, if we can take any skin cell and turn it into a baby, which just a little help (they aren't truly pluripotent since I don't think they can develop a placenta) then you better get in there and save that pillow case every morning.