What is the difference between morale hazard and moral hazard?

Answer 1

In short, Moral hazard is a hazard dealing with the difference between right and wrong while a moral hazards is a hazard dealing with people's attitudes.

At length, in the world of insurance, conditions that increase the frequency and severity of a loss are considered hazards. For example, placing a magazine rack beside your fireplace is a hazard. It heightens the chance of a fire to your house.

There are four hazard categories according to the CPCU study of Risk Management and Insurance. They are Moral, Morale, Physical and Legal.

Examples -

Moral hazard - conditions resulting from a weakness of human character (when someone should know the difference between right and wrong), such as embezzlement.

Morale hazard - conditions resulting from a person's indifferent attitude toward a loss when a property of exposure is insured, such as failing to lock the doors or roll up the windows of your car or leaving valuables in plain sight in your car . . .especially during the holiday season.

Answer 2

"Moral hazard" refers to the risk that someone may act recklessly because they are protected from the consequences of their actions, often due to insurance or guarantees. "Morale hazard" is a term used more in the context of employment, where employees may become less motivated or careful due to a lack of consequences for their actions. In essence, moral hazard relates to financial risks, while morale hazard pertains to work ethic and behavior.