Moral Hazard

When studying the law, it is not enough to learn what the law is; one also must develop an appreciation of why the law is what it is. What are the factors and forces that courts and legislatures take into account when making decisions about what the law should be?

In a common-law system, courts in civil cases generally make decisions about who carries the liability or bears the risk in a given situation based on the kind of behavior which we as a civilized society believe should be encouraged or discouraged. We make trespassing a strict-liability tort because we want to encourage people to stay off others' property. We place the burden of risk on drivers rather than pedestrians because we want to encourage people to drive more carefully, and because automobiles can cause greater damage more readily.

Most civil law questions boil down to: Who should have the entitlement, who should be held liable, and why? The question of negligence is a pre-eminent one in nearly all aspects of civil (tort) law, and even has applications in the criminal context. Negligence is a failure to act with due care, a failure to do what a reasonable person would do in similar circumstances. The question then becomes, who is the "reasonable" person, and what is "reasonable" behavior? The answer usually reflects what I mentioned above, i.e., what kind of behavior do we, as a society, want to encourage? What would be the most efficient outcome, in terms of allocation of resources? Who is best able to bear the risk, and why? What is the proper balance between individual autonomy and social welfare?

There are many factors which contribute to the distribution of entitlements and risks in civil law under a negligence theory. One of these is moral hazard, which suggests that if a person knows he is not going to be liable in a given situation, he will be less careful. If you, the driver, know that you will not be held liable for hitting a pedestrian, you have no incentive to watch out for pedestrians and avoid hitting them, let alone buy insurance, and a lot of people will probably get killed as a result. If you are a homeowner and know that you won't be held liable for someone tripping and falling on your sidewalk, you have no incentive to repair it and keep it safe. We want a safe environment for everyone, so we place these duties upon drivers and homeowners to take steps too keep things safe, which is more sensible and efficient than placing the burden on the rest of us to avoid these hazards.

I could go on and on about tort principles, but the point of this discussion is that many of the common-sense principles involved in negligence law are completely cast aside in public high schools when it comes to how we deal with students, in terms of both academic and disciplinary accountability and, yes, liability. In many places, the very concept of liability on the students' part is anathema; i.e., the students cannot possibly be liable for anything, because they are mere children (a term which applies to high school students as well as younger ones) and thus not responsible for their actions. This has become a convenient, all-purpose fall-back position for just about everyone in just about every case: At the end of the day, even if the child has clearly committed a violation of a standing rule or has failed to meet a reasonable requirement, they're "just kids," so we can't or shouldn't hold them liable. Where tort cases generally seek out blameworthy conduct to determine liability, the general rule in schools seems to be that nothing a student does can ever be considered blameworthy, simply because he is a minor.

Does this really make sense as a rationale for ignoring basic legal principles of relationships between parties and their rights and obligations with respect to one another? Does it make sense to shift all of the rights and entitlements to one party, and all of the duties and obligations to the other, simply because of the former's minority status? The law certainly doesn't think so; minors are not immune from civil (tort or contract) liability because they are minors. See Daniels v. Evans, 224 A.2d 63 (N.H. 1966); Dodson v. Shrader, 824 S.W.2d 545 (Tenn. 1992). Yet the schools, for whatever reason, don't seem to want to hold students liable for anything, under any circumstances. When pressed for an explanation, no one in my experience has ever been able to get past the idea that "they're just kids, they don't know any better, give them a break." Do the students really benefit in the long run from being taught at a young age that nothing is ever their fault?

This is where the principle of moral hazard comes in. As I discussed at some length in the previous post, if the student knows he won't be held liable in a given situation, he will have no incentive to do the right thing. To illustrate, I have a rule in my classroom that lateness to class is a strict-liability (another legal principle) offense. If you are late, you are late; don't tell me why because it doesn't matter. Students will then inevitably complain that they are coming from gym or from their studio class or whatever else they believe makes it impossible for them to arrive on time, which in turn leads to my consulting with the teacher in question and having him or her tell me that the students are given plenty of time to get to their next class; the cycle repeats itself and nothing is resolved. To attempt to monitor each individual student's movements between classes every class period every day would be absurdly inefficient; neither I as an individual nor the school has the resources to do that. It would not be reasonable.

That leaves me, the teacher, with only two choices: blanket immunity, or strict liability. I either have to forgive them for being late or hold them liable, wholesale, regardless of the reason. The students, of course, will complain that it's "not their fault" they're late, and that it's "not fair" that they should lose points for it if they can't help it. The problem with that is if they know they will not be held liable for being late, they will have no incentive to even try to get to class on time. In fact, they would have an incentive to take their time rather than hurry up. This is moral hazard. While it may be cynical to assume students will generally not make a good-faith effort to get to class as quickly as they can, I would not only defy anyone to prove otherwise based on experience, but the contention misses the point in any case. The point of having liability rules, as discussed above, is to give people incentives to behave in a certain way. We want students to get to class on time, and barring that we want them to get there as soon as they can, so they need an incentive to hurry up. Strict liability for lateness does that. Blanket forgiveness does not. If a student truly cannot get to class on time, he needs to make up for it in other ways, i.e., behavior and participation, to keep such habitual lateness from affecting his grade.

The same principle applies to the topics of performance-based assessments and expectations which I discussed at length in the previous post. If students know that they will not be held liable grade-wise for not submitting an assignment, they won't submit it. If they know that they only need to claim ignorance of or uncertainty about the assignment, then that's what they'll do. Where schools essentially relieve students of this duty and place it on the teachers (simply put, blaming the teacher when the students don't do their work), they violate an essential principle of civil law. If the desired behavior, the thing we want to encourage, is for the students to do their work and learn, a policy like this will not have the desired effect; it will actually do the opposite. It actually encourages students not to do their work, not to learn, not to improve, not to even know what to do or pay attention to instructions. It's completely counter-intuitive.

The law typically places risks and burdens on those who are in the best position to avoid or bear them. The person with the most direct interest in a student's grade should be the student. Consequently, the person in the best position to bear any risks associated with that grade should also be the student. The student is the one who must make the choices of what to do from day-to-day, moment-to-moment, within each of his classes and academic requirements. Isn't it the student's responsibility to know what she needs to do and do it? Isn't he the one whose interests are at risk? Isn't the student in the best position to avoid the risk by knowing, and doing, what she's supposed to do? Logically, and under any reasonable conception of civil law and liability, the answer to all of these questions should be "yes." Yet somehow the schools don't seem to think so. I had one supervisor tell me that "it's not his fault" if a student "doesn't understand" an assignment and thus makes no attempt to do it, because I "probably didn't explain it right"; another justified the students' brazen plagiarism by telling me I "must have made the work too hard, so they had to cheat."

Are you kidding me?

What, then, is the rationale for this? What can possibly be accomplished by shifting the burden of student performance entirely to the teacher, of purposefully ignoring the principle of moral hazard in determining student liability in an academic or disciplinary context? What can administrators who think this way, and who say things like this to teachers, possibly be thinking? How does this help students learn?

The answer, I think, is obvious: self-esteem. Again, we reach the nadir of not wanting the children to "feel bad" or "turn off," so we have to cast logic and reason to the wind. It must follow that we don't actually want the students to learn, neither the academic skills and content nor the practical, real-life principles of responsibility and accountability. If this is not the primary goal of a school, then that place cannot rightly be called an institution of learning. Why do we need qualified, expert teachers if their primary job is not to generate actual learning in their respective subject areas? Do I really need an advanced degree just to pat every child on the back and tell them all how brilliant they are?

This whole business about absolving students of liability because they're "just kids" does not hold water with me, especially in a society where adolescents typically demand and enjoy adult autonomy in many aspects of their lives. Students bristle against being treated like children in not being allowed to do certain things, and insist that they are entitled to the same rights as adults on such topics as carrying cell phones, using elevators in multi-story school buildings (which are, in many cases, reserved for teachers and handicapped students only), and other often less-benign behaviors. Put simply, students want (and parents give them) adult autonomy but not adult accountability.

In a word (one I think students need to hear significantly more often), NO. Students cannot complain about their "rights" being curtailed because they're minors, and then use their youth and inexperience as an excuse for wrongful behavior. Students need to be taught how to behave in a civilized society, part of which means that blameworthy conduct leads to unpleasant consequences, and mistakes must be paid for, no matter how old you are.