The moral hazard of social insurance ________ as duration increases; the benefits to consumption smoothing __________ as duration increases.

Question

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As the duration of social insurance increases, individuals may have less incentive to avoid risky behavior, increasing moral hazard. However, the benefits to consumption smoothing decrease because the longer duration may lead to over-reliance on insurance rather than personal savings or income.

The Moral Hazard of Social Insurance ________ as Duration Increases;