Insuring something against loss can make people take worse care of it

Economists call it moral hazard: once a cost is covered by someone else — an insurer, a bailout, a guarantee — the covered party has less incentive to avoid the risk in the first place. Kenneth Arrow's 1963 paper on medical insurance was among the first to formalize the idea, later used to explain reckless lending before 2008 and over-treatment in healthcare.

— Kenneth Arrow, Uncertainty and the Welfare Economics of Medical Care — American Economic Review, 1963