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MORAL HAZARD looks at Halachic issues from an economic mindset. Behind the pragmatics of economics is the scientific process of economics, and it stems from a unique outlook on society and decision-making, providing an effective language for investigations into Halacha.


Introduction
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This column will look at Halachic issues from an economic mindset. This is not the same thing as a column that would look at economic issues from a Halachic mindset. This is not a column on money issues in Halacha. Economics, in practice, is a key to good money management, but behind the pragmatics of economics is the theoretical, the ideological, the scientific process of economics, and it stems from a very unique and focused outlook on society and decision-making. Most significantly, it provides a coherent and effective language for investigation. In this column, economic methodology will be used to analyze topics in Halacha. Read Full Article


Insurance

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An ox, belonging to Reuven, gores an ox belonging to Shimon. What happens if Reuven had purchased insurance to cover the damage done by his ox? Reuven’s insurance company will compensate Shimon for the damage he has suffered. Is Reuven excused from any further compensation? Read Full Article


Cost/Benefit Analysis: Sin and Mitzvah
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As can be attested by almost anyone who has tasted stolen chocolate, crime does pay. This is not only a matter of perspective—it is not simply that we, as humans, perceive gain where, in fact, as God knows, there is none. There is gain. To some, this gain is morally unacceptable. Sin should, according to such an opinion, be devoid of benefit. But to an economist, awareness of benefit without awareness of cost is insufficient. Read Full Article


Repentance and Preferences
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If we act exclusively according to our own best interests, we sin when it appears to be beneficial to sin and stop sinning when it no longer seems beneficial. If a person sins today and no longer sins tomorrow it is either because the (perceived) world changed (external factors were modified) or because his/her preferences were altered (internal factors were modified) or due to a combination of these factors. Read Full Article


The Margin
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How are we to know what quality or action demonstrates excess? Would the gemara tell us to refrain from doing something without including at least some indication of what it is we’re supposed to be refraining from? ‘Excessive fear’ is a vague term that probably means something different to each of us. Is there a more concrete halachic definition of ‘excess’ in this context? Read Full Article


The Safe Side:
The Role of Risk Aversion
In Torah Observance

1. "The Safe Side"

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The economic approach to risk notes that there is a cost to risk aversion: like Gretzky said, you miss all the shots you never take. In other words, if you don’t gamble, you can’t win. Now this form of encouragement may be appropriate when you are trying to convince a child to play sports or study for a test, but it’s probably not what you would say to someone who is contemplating trying cocaine. Similarly, it would be foolish to say to an observant Jew, “Hey, it might be kosher—why not take a chance?” It is difficult to perceive any benefit to risk when the worst-case scenario involves God’s wrath. But the truth is that risk aversion—even when dealing with religion or narcotics—always comes at a cost and it is important to recognize this cost. Read Full Article

2008 NISHMA