Which of the following is NOT considered a moral hazard?

A moral hazard refers to a situation where an individual’s behavior may change as a result of having insurance coverage, potentially leading to increased risk-taking that would not have occurred otherwise. This concept generally involves actions that are directly influenced by a lack of accountability due to insurance protection.

In this context, poor credit history is not inherently a moral hazard because it does not directly imply the individual's willingness to take on excessive risks or to engage in behavior that increases the likelihood of a claim. Instead, it relates more to financial behavior and responsibility. While it can indicate potential issues with managing finances, it does not suggest that an individual would engage in riskier activities because they believe they are insured against the consequences of those activities.

In contrast, criminal activity, alcohol abuse, and drug abuse can be seen as moral hazards because they involve behaviors that might be encouraged or become more frequent under the assumption that insurance will cover the fallout from these actions. For instance, a person engaging in risky or illegal activities may feel less constrained by the potential consequences if they have insurance to protect them against claims resulting from those actions.

Thus, identifying poor credit history as not being a moral hazard highlights the distinction between financial responsibility and behaviors that directly lead to increased risk in insurance contexts.