Social insurance can be justified on the grounds of

Question

Quizplus · Accepted Answer

Social insurance can be justified by various reasons. Adverse selection is the idea that people who are more likely to experience a loss will be more likely to buy insurance, driving up costs for everyone. Social insurance helps to mitigate this risk. Decision-making costs refer to the cost of information and administration involved in making decisions about insurance. Social insurance programs help to simplify these decisions. Income distribution refers to the idea that some people may be unable to afford insurance, and social insurance helps to distribute the costs of providing that insurance across society. Paternalism refers to the idea that people may make poor decisions for themselves, and social insurance programs can help to protect them from the consequences of those decisions. Therefore, all of the above reasons justify social insurance.

Social Insurance Can Be Justified on the Grounds of