Gambling isn't wrong. Gambling is stupid . Hedging risk is not stupid. That's the difference.
There is no risk in which to hedge unless you gamble. If gambling is stupid, then hedging risk must also be stupid by association.
What makes gambling wrong but insurance right? (2017)
111–120 of 328 posts
Re: What makes gambling wrong but insurance right? (2017)
#112Earlier quoted context omitted.
Being wealthy enough to cover it yourself doesn't mean it's stupid to buy the option to avoid the downside if it's priced properly.
Insurance companies are always going to give you unfavorable odds, unless you think for some reason youre more likely than average to have an accident. I don't understand why car/home insurance isnt nationalized
Car insurance is nationalized in a few Canadian provinces.
Re: What makes gambling wrong but insurance right? (2017)
#113Insurance is different from gambling because if you pay and things go well, things go well. If you pay and things go badly, things go a lot less badly. In fact, insurance is the exact opposite of gambling. Gambling is all about risking it all. It's an activity that sits at the extremes of the bell curve. You win it all, you lose it all. Insurance on the other hand is a small price you pay that, through statistics, al…
In other words, insurance is gambling's antidote. Gambling takes on a risk, insurance hedges against the risk taken.
But if gambling is wrong – implying you shouldn't do it – what do you need insurance for? If you never gamble, you don't need to hedge the gamble. If gambling is wrong, then insurance must also be wrong by association.
Perhaps it is not gambling that is wrong, but rather gambling for the sake of entertainment? That would have no doubt been seen as a diminishment of hard work under Protestant eyes. In other words, farming would have been seen as okay because it requires hard work, done for a purpose. A casino game, on the other hand, would not be acceptable as someone may gain (over and above the fun value) while having fun.
Re: What makes gambling wrong but insurance right? (2017)
#114Earlier quoted context omitted.
Having insurance is gambling, but not having insurance is also gambling. This is because life itself is a gamble. We don't know what the future holds and we have the choice to insure or gamble on just about any aspect of our lives. Insurance companies are just like casinos in that the math always favours them if you look at a sufficiently large sample size. Even so, some things are still worth insuring. e.g. Your hou…
Back in the dark ages, the University I worked for had a lab full of computers stolen. I discovered that the University did not have insurance for this, or for a lot of things, because the University was a large organization with a lot of assets and could easily absorb the cost of theft. I'll assume they got the risk analysis right, since they wrote the textbooks on that sort of thing. The math changes though if you…
Not uncommon for universities to self-insure. I don't know if they commonly reinsure, but I would assume they do.
Re: What makes gambling wrong but insurance right? (2017)
#115Earlier quoted context omitted.
Having insurance is gambling, but not having insurance is also gambling. This is because life itself is a gamble. We don't know what the future holds and we have the choice to insure or gamble on just about any aspect of our lives. Insurance companies are just like casinos in that the math always favours them if you look at a sufficiently large sample size. Even so, some things are still worth insuring. e.g. Your hou…
What about the gamble that the whole thing is a scam from the beginning? If they are going to fight tooth and nail to never payout anyway its all insanity. Also how could insurance ever be a "for profit" business? That could never work. Profit means straight up planning scam right from the beginning, hoping that a big enough payout triggers business failure and you dont have to pay out anyone, yippee free and clear r…
I think thats why states usually regulate the industry
Re: What makes gambling wrong but insurance right? (2017)
#116Earlier quoted context omitted.
You can choose to live your life without insurance, in which case you have to bear all the damage from bad events but you also benefit fully from good events, or you can live your life with insurance, taking less losses from bad events and getting less from good events. As said, it simply reduces variance in your life/business. You have to choose if that's how you want to live your life.
> You can choose to live your life without insurance No, in many cases you can't. Health, car, homeowners, and renter's insurances are mandatory until you are wealthy.
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Re: What makes gambling wrong but insurance right? (2017)
#117Earlier quoted context omitted.
> You can choose to live your life without insurance No, in many cases you can't. Health, car, homeowners, and renter's insurances are mandatory until you are wealthy.
Health insurance isn’t mandatory in the USA. It’s a bad idea not to have it though. You might get away without insurance when you are young, however, assuming nothing bad happens. Without being able to price discriminate on pre-existing conditions, however, it’s not really free market insurance anymore. Liability Car insurance is mandatory only if you use public roads, which most people do. Collision insurance is onl…
Well sure, if you are willing to violate a few laws you don't have to get insurance.
Re: What makes gambling wrong but insurance right? (2017)
#118Earlier quoted context omitted.
Being wealthy enough to cover it yourself doesn't mean it's stupid to buy the option to avoid the downside if it's priced properly.
Insurance companies are always going to give you unfavorable odds, unless you think for some reason youre more likely than average to have an accident. I don't understand why car/home insurance isnt nationalized
Reducing variance in a random outcome still has value. For instance, you might have the money to cover an adverse outcome, but if you could guarantee you wouldn't need the money, then you could park it in an illiquid asset (e.g. some type of investment).
Re: What makes gambling wrong but insurance right? (2017)
#119Earlier quoted context omitted.
Having insurance is gambling, but not having insurance is also gambling. This is because life itself is a gamble. We don't know what the future holds and we have the choice to insure or gamble on just about any aspect of our lives. Insurance companies are just like casinos in that the math always favours them if you look at a sufficiently large sample size. Even so, some things are still worth insuring. e.g. Your hou…
Back in the dark ages, the University I worked for had a lab full of computers stolen. I discovered that the University did not have insurance for this, or for a lot of things, because the University was a large organization with a lot of assets and could easily absorb the cost of theft. I'll assume they got the risk analysis right, since they wrote the textbooks on that sort of thing. The math changes though if you…
I think this profit-vs-non-profit thinking is reductionist. A non-profit insurer still has expenses. They have to pay their staff, rent offices, pay vendors, and so on. In fact, nothing stops them from spending more than a for-profit corporation would.
Anyway, the math doesn't change: the insured still pay more than they are getting back.
Re: What makes gambling wrong but insurance right? (2017)
#120Insurance is different from gambling because if you pay and things go well, things go well. If you pay and things go badly, things go a lot less badly. In fact, insurance is the exact opposite of gambling. Gambling is all about risking it all. It's an activity that sits at the extremes of the bell curve. You win it all, you lose it all. Insurance on the other hand is a small price you pay that, through statistics, al…
Having insurance is gambling, but not having insurance is also gambling. This is because life itself is a gamble. We don't know what the future holds and we have the choice to insure or gamble on just about any aspect of our lives. Insurance companies are just like casinos in that the math always favours them if you look at a sufficiently large sample size. Even so, some things are still worth insuring. e.g. Your hou…
Only thing I insure is umbrellas. They never last more than 2-3 years and a 7 year replacement plan for like 8.99 is a reasonable deal. Anything else I tend to just go with credit card purchase protection and MFR warranty.