Economics Dictionary of Arguments

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Institutions: Institutions are social structures that organize and guide human behavior. They can be formal or informal, and they can be public or private.
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Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments.

 
Author Concept Summary/Quotes Sources

Nicholas Barr on Institutions - Dictionary of Arguments

Gaus I 212
Institutions/welfare state/Barr/Moon: [in a welfare state] voluntary welfare provision may (...) be unable to cover everyone in a society. Many people in the heyday of mutual aid societies were not members, and non-members were often among the least advantaged, those without steady jobs and a secure place within the community.
Adverse selection: organizations offering protection recognize that those most likely to need protection have
Gaus I 213
the greatest incentive to seek it, and so to join a mutual aid society or to purchase insurance, while
those facing the lowest risks have an incentive to stay out. As a result of this process of 'adverse selection' , risks tend to be spread over a smaller and smaller part of the population, and premiums must rise accordingly. This process of adverse selection can continue to the point where most of those in need of protection are unable to afford it, because premiums have to rise so high that all but the most vulnerable drop out. The welfare state can combat the problem of adverse selection by making membership compulsory: 'because low risks cannot opt out, it makes possible a pooling solution' (Barr, 1992(1): 755).
>Adverse selection/Barr.

1. Barr, Nicholas (1992) 'Economic theory and the welfare state'. Journal of Economic Literature, 30 (2): 741-803.

Moon, J. Donald 2004. „The Political Theory of the Welfare State“. In: Gaus, Gerald F. & Kukathas, Chandran 2004. Handbook of Political Theory. SAGE Publications


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Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments
The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
Barr, Nicholas
Gaus I
Gerald F. Gaus
Chandran Kukathas
Handbook of Political Theory London 2004


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