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Measuring the losses due to abuse is much easier than measuring the cost of bureaucracy.



It's precisely the other way around. Cost of bureaucracy is easy to measure, abuse is not measurable (only caught abuse). Nevertheless, the point is that it is difficult to compare a known cost to an unknown cost, so that still stands.

People are risk averse, so a known cost is preferable, even if expectedly higher than dealing with abuse. This is in part why insurance is so profitable.




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