Insured Victim Effect (a.k.a., no harm, no foul)

Sometimes bad things happen.

• A dead tree falls on a neighbor's fence from an adjacent property.
• An arsonist burns a home to the ground.
• A valuable diamond necklace is stolen.

When we first hear of things like these, our first reaction is often to the event itself and the well-being of the person - we want to make sure the person is okay.  But before we launch into a diatribe about how awful the person or entity is that caused this to happen, it's quite common to interject one quick question:  "was it insured?"


Three researchers published a paper titled "The insured victim effect:  when and why compensating harm decreases punishment recommendations" in the March 2013 volume of Judgment and Decision Making.  PDF version of the paper from SJDM is available here.

In the paper the three researchers (van de Calseyde, Keren, and Zeelenberg) presented situations to university students in which:  some bad thing happens to a victim and there is a clear responsible party for making the bad thing happening.  Some groups of students received additional information that the victim was insured, or in some other way had experienced diminished harm (stepped on a rotten ladder rung, but the victim was uninjured).

The big finding was this:  the more the victim suffers in a given scenario, the greater punishment students recommend for the responsible party.  If the harm to the victim is mitigated through insurance (get a new camera) or other means (bad thing happens but victim is uninjured), the students recommended less severe punishment for the responsible party.

The phrase "no harm, no foul" is a popular one in our vernacular.  The idea behind it is similar to what's shown in these experiments.  Even though a potentially terrible event happened, if the effect on the victim is diminished in some way, punishment is reduced.

The authors make the following points in the general discussion (p.170-171 of the journal).  Authors are in quotes, my comments follow in italics.

•  "People recommend milder punishments for perpetrators when the victim was insured, although people believe that a sentence should not depend on whether the victim was insured or not."  The evidence points to people saying they believe in equal treatment, but behaving in a way that demonstrates inequality.
• "Nordgren and McDonnell [2011] recently showed that increasing the number of people victimized by a crime in turn decreases punishment recommendations."  If we can't identify and relate to a single victim or small group, it's harder for us as observers to identify with the harm caused.
• "Walker (2007) has shown that when overtaking a cyclist, drivers are less cautious...when cyclists wear a helmet...than when they do not.  Thus the safety measure may ironically attract hazard."  In the introduction the authors reference moral hazard, "the increased risk taking by individuals for whom the consequences of risk are reduced which, in turn, increases the probability that misfortune will strike."  So the likelihood of having some insurance or protection against a bad event may actually increase the likelihood of it happening for two reasons:  first through the behavior change of the individual holding the insurance; and again through the behavior change of others towards a protected individual.

If you have a few minutes (and if you like this kind of stuff), the paper's worth a read.  Enjoy!

Best,
Bryan