OK, we admit it. Sometimes the business world gets a bit bogged down in jargon. But this is important stuff, so we want to help clear up any confusion.
In our new series, LINGO (the language of business), McCombs School of Business faculty offer bite-sized explanations of business vocabulary, sure to help you feel more informed.
To kick things off, economist and McCombs senior lecturer of finance Michael Brandl explains “moral hazard,” a phrase that Google-trended into the stratosphere as the financial crisis unfolded.
Watch Brandl’s explanation of “moral hazard” on McCombs’ YouTube channel.
This post originally appeared in the McCombs Today blog on Feb. 16.
Resources for People
Moral hazard can be applied to the personal bankruptcies that are rising throughout the whole U.S. Is it OK for people to just file for bankruptcy and therefore eliminate their debt overnight? Or do we keep punishing these people for the one or two mistakes that they have made and never let them recover from it. Personally I believe we should give people the chance to recover and prove themselves, because it happened to me.