Moral hazard in the judicial system
October 22nd, 2010
Much has been written about the moral hazards of our financial system, but today’s CNN headline indicates an interesting parallel in the judicial system: “Jury awards $18.5 million to man cleared by DNA.”
A first jury convicted this individual, without bearing any significant risk (beyond a weight on their conscience) that their judgment may be wrong. A second jury then awarded damages that are paid for by the state. Once again, the jury bore none of the financial downside of their decision. That is, until the State of New York decides to raise the jurors’ (and your) taxes to cover the now larger budget deficit.