(Wouldn’t you know it? Just as I was hitting “Save” on this entry, my ADSL started going up and down like… well… like it did earlier this week. Apologies for the temporary double-post, and to all the people reading via RSS who saw two identical headlines and made appointments to have their glasses prescription checked.)
While watching Spider-Man 2, a thought struck me. Several thoughts, in fact – but other than “How can glass be flying toward the fusion reaction along with metal? Glass isn’t magnetic,” and “But wait, tritium is a gas at room temperature,” the main thought that I took from the film was this…
Wow, how easy would your job be if you were a cop or firefighter in Spider-Man’s New York City?
The concept of moral hazard is probably familiar to most people, but not under that name. It describes a situation where insurance or external protection changes a person’s behaviour (or a company’s behaviour) in undesirable ways. There’s an excellent explanation here, which is really worth a read – the important point to note is that it’s a logical extension of people’s desire to maximise their returns.
Now, this doesn’t just apply to normal insurance – it can apply to any situation where there’s an external influence that might provide a backup. One spectacular scene in Spider-Man 2 shows Spider-Man web-slinging his way down the street, chasing and overtaking a five-car police squadron on their way to the scene of some undoubtedly terrible crime. Put yourself in one of those police cars, having just seen one of the city’s most famous superheroes flying down the street above you. What would your first thought be?
- “I bet I can do a better job than he can, and add value to the city at the same time! I’ll race you!”
- “I’m paid the same whether I catch the villain or Spider-Man does. Where’s the nearest Dunkin’ Donuts?”
Yeah, same here.
This is the problem that moral hazard creates. When you have an insurance policy (in this case, your friendly neighbourhood Spider-Man), you’re likely to change your behaviour in adverse ways. (Admittedly, it’s not quite the situation envisaged in the linked article above, but it’s not dissimilar.)
Now, what can we do about this situation? Assuming that there was a sudden rash of superheroes flying around, solving dastardly crimes and getting the girl, how would we solve the problem of the police and fire crews deciding to sit idle and let other people do their job? (I would assume that the ambulance crews would still be required, unless superheroes with magical wound-healing powers popped up as well.)
The first, and most visually appealing way, would be to slow down the superheroes’ crime-fighting – with supervillains! If we restrict their ability to take on all but the most critical public emergencies, then the police and fire services will have to take up the slack.
This idea suffers from one major problem, and as always, it’s the cost of implementation. Supervillains would be expensive to train, especially if they had to be mass-produced to meet demand. Imagine the cost of one unstoppable superweapon (numbers 40 and 72), and multiply that by the number of supervillains who would be in need of such weapons, and then add a margin for the inevitable government inefficiencies (such as brochures that would be distributed to every household in NYC to explain the new program). Isn’t it scary?
Perhaps it might be better to just let Spider-Man do his job. Regular readers of this site will probably be aware that I’m generally not in favour of government intervention in the private sector, and the same idea can be applied here. Spider-Man and his ilk are doing their job for free, as far as we know, which significantly undercuts the cost of arming and training a police force. As long as they’re not engaging in dumping by providing their services too cheaply, in an effort to drive competitors out of business, then this private crime-fighting effort should be supported and applauded.