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He's using it correctly here though: the risk is that if you provide housing to the lowest rung while making the next group down pay $1.5K/bedroom/month, some of the next group down will decide that they would rather become part of the "lowest rung" group rather than pay the money. It's like the phenomena of people committing petty crimes so that they can get a warm bed and food in jail.



You mean like all those millionaires who decide to become thousandaires so they don't pay more taxes? Give me a break.


First, that is a terrible analogy.

If I'm interpreting the ops statement correctly, this is more analogous to a system where post-tax income decreases with rising income instead.


Your example illustrates to me why moral hazard isn't the best title for this. We should provide free housing to people in need so they don't do things like commit a crime to go to jail.




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