Riesgo Moral

In our continuing series on how incentives shape behavior, we take a look across the sea to España, where a man tragically sawed off his arm to collect on eight insurance policies.  It seems that insurance fraud is on the rise in the depressed economies of Europe

According to data from the ICEA, which carries out research for insurance and pension providers, there were 54,114 fraudulent claims in 2003; in 2011, there were 130,959.

We, of course, have seen this sort of thing before.  And even before that.

But it turns out that it is not only the depressed economies of Europe that are seeing a rise in fraud.  Right here in the U.S. it appears that there is a rather substantial rise in Social Security Disability Insurance claims.  I had first heard about this on an EconTalk episode featuring David Autor.

Craig “Ironman” Eyermann at the Political Calculations blog has the numbers here and further elaboration here.