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Increasing Claims for Soft Tissue Injuries in Workers' Compensation: Cost Shifting and Moral Hazard


  • Butler, Richard J
  • Durbin, David L
  • Helvacian, Nurhan M


During the last decade, the distribution of workers compensation claims has exhibited a marked shift towards soft tissue injuries such as sprains, stains, and low back claims. There are three possible explanations for this trend: (1) safety incentives induced by workers compensation or OSHA may have reduced other, traumatic claims; (2) the movement away from heavy manufacturing and the 1980 construction recession may have changed the underlying risk of a workplace injury; and (3) there has been moral hazard behavior on the part of workers and health care providers. Using a new data source and estimation framework, we find evidence that moral hazard response explains most of the 30% increase in the proportion of soft tissue injuries during the 1980s. Copyright 1996 by Kluwer Academic Publishers

Suggested Citation

  • Butler, Richard J & Durbin, David L & Helvacian, Nurhan M, 1996. "Increasing Claims for Soft Tissue Injuries in Workers' Compensation: Cost Shifting and Moral Hazard," Journal of Risk and Uncertainty, Springer, vol. 13(1), pages 73-87, July.
  • Handle: RePEc:kap:jrisku:v:13:y:1996:i:1:p:73-87

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    References listed on IDEAS

    1. Hong, Chew Soo & Karni, Edi & Safra, Zvi, 1987. "Risk aversion in the theory of expected utility with rank dependent probabilities," Journal of Economic Theory, Elsevier, vol. 42(2), pages 370-381, August.
    2. Quiggin, John, 1982. "A theory of anticipated utility," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 323-343, December.
    3. Battalio, Raymond C & Kagel, John H & Jiranyakul, Komain, 1990. "Testing between Alternative Models of Choice under Uncertainty: Some Initial Results," Journal of Risk and Uncertainty, Springer, vol. 3(1), pages 25-50, March.
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    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Dionne, Georges & Gagne, Robert, 2002. "Replacement Cost Endorsement and Opportunistic Fraud in Automobile Insurance," Journal of Risk and Uncertainty, Springer, vol. 24(3), pages 213-230, May.
    2. Michele Campolieti, 2002. "Moral Hazard and Disability Insurance: On the Incidence of Hard-to-Diagnose Medical Conditions in the Canada/Quebec Pension Plan Disability Program," Canadian Public Policy, University of Toronto Press, vol. 28(3), pages 419-441, September.
    3. repec:spr:eujhec:v:18:y:2017:i:9:d:10.1007_s10198-017-0878-6 is not listed on IDEAS
    4. Moral De Blas, Alfonso & Martín-Román, Ángel & Rodríguez Caballero, Juan Carlos, 2013. "El papel de las ETTs en la reducción del riesgo moral asociado al seguro por accidentes de trabajo: El caso de España/The Role of the TWAs in the Reduction of Moral Hazard in Workplace Accident Insura," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 31, pages 497-522, Septiembr.
    5. Fortin, Bernard, 1997. "Dépendance à l’égard de l’aide sociale et réforme de la sécurité du revenu," L'Actualité Economique, Société Canadienne de Science Economique, vol. 73(4), pages 557-573, décembre.
    6. Georges Dionne & Robert Gagné, 2001. "Deductible Contracts Against Fraudulent Claims: Evidence From Automobile Insurance," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 290-301, May.
    7. repec:pal:gpprii:v:43:y:2018:i:1:d:10.1057_s41288-017-0055-2 is not listed on IDEAS
    8. Fortin, Bernard & Lanoie, Paul, 1998. "Effects of Workers' Compensation: A Survey," Cahiers de recherche 9816, Université Laval - Département d'économique.
    9. Stijn Viaene & Guido Dedene, 2004. "Insurance Fraud: Issues and Challenges," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 29(2), pages 313-333, April.
    10. Hansen, Benjamin & Nguyen, Tuan & Waddell, Glen R., 2017. "Benefit Generosity and Injury Duration: Quasi-Experimental Evidence from Regression Kinks," IZA Discussion Papers 10621, Institute for the Study of Labor (IZA).
    11. Geetha M. Waehrer & Ted R. Miller, 2003. "Restricted Work, Workers’ Compensation, and Days Away from Work," Journal of Human Resources, University of Wisconsin Press, vol. 38(4).
    12. Michele Campolieti & John N. Lavis, 2000. "Disability Expenditures in Canada, 1970-1996: Trends, Reform Efforts and a Path for the Future," Canadian Public Policy, University of Toronto Press, vol. 26(2), pages 241-164, June.
    13. Moral De Blas, Alfonso & Martín Román, Ángel & Rodríguez Caballero, Juan Carlos, 2010. "La antigüedad y las diferencias de esfuerzo entre trabajadores de distintas zonas geográficas: un estudio de los accidentes de trabajo/Seniority and Relative Effort Exercised by Workers from Different," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 28, pages 201(20á)-20, Abril.
    14. Ángel Martín-Román & Alfonso Moral, 2017. "A methodological proposal to evaluate the cost of duration moral hazard in workplace accident insurance," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(9), pages 1181-1198, December.
    15. Bande, Roberto & López-Mourelo, Elva, 2014. "The spatial distribution of workplace accidents in Spain: assessing the role of workplace inspections," MPRA Paper 56767, University Library of Munich, Germany.

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