141–150 of 328 posts
In insurance you expect to come out ahead in the average case. In gambling you expect to come out behind in the average case. Therefore insurance is rational and gambling is irrational.
Depends on the game - poker for example (home game not at a casino, no rake), on average no one wins or loses.
Insurance 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…
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IMO gambling gets a bad reputation by people who only look at the expected value. If you place a bet where the cost is low enough that it won’t make a qualitative difference to your life, and the possible (not expected) reward is such that it would make a qualitative difference in your life, then you might have maximized the probability of achieving that qualitative difference, despite lowering your expected value. T…
> then you might have maximized the probability of achieving that qualitative difference No, you have only maximized the probability if you bet all of your money and all of the money you can borrow, beg or steal.
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No, the other poster is actually right. In betting on outcomes, there are two roles - bet (“long”) and lay (“short”). An insurance company is exactly a bookmaker; they are buying a bunch of risk and being paid a vig (or in the case of long-duration bets and life insurance, getting the carry) on each of those risks. This is indistinguishable from insurance, particularly when the beneficiary of insurance isn’t the subj…
In general, you are not able to buy insurance for more than the value of something. If you could, that would be a form of gambling. But up until that line it's anti-gambling. Buying a position out of nowhere is gambling. Buying a position to directly counteract the position you already have is not gambling. If you short 50 shares of a stock when you already owned 80 shares, you are doing the opposite of gambling. You…
I don’t think gambling is inherently immoral; I think mismanaging risk (in either direction) is one of the ways people mess themselves up and therefore encouraging people to take bad risks is immoral. This is not quite the same thing, though it’s close - but the difference between these two positions is what led to prohibition.
Don’t get me wrong, bookies are awful in many ways, but so are bars and crypto exchanges and E*Trade. The right approach in all cases is harm reduction.
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No, the other poster is actually right. In betting on outcomes, there are two roles - bet (“long”) and lay (“short”). An insurance company is exactly a bookmaker; they are buying a bunch of risk and being paid a vig (or in the case of long-duration bets and life insurance, getting the carry) on each of those risks. This is indistinguishable from insurance, particularly when the beneficiary of insurance isn’t the subj…
In your scenario, you are using gambling as insurance, and that's different. If you bet $20 on the Greenfeet it's not because something bad happens to you if they win.
To me it sounds like you're saying whenever you like it, you will call it insurance, and whenever you don't like it, you will call it gambling. "It" is not apriori anything, until you have decided what you want to call it. That makes it all the same thing, pretty much.
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No, the other poster is actually right. In betting on outcomes, there are two roles - bet (“long”) and lay (“short”). An insurance company is exactly a bookmaker; they are buying a bunch of risk and being paid a vig (or in the case of long-duration bets and life insurance, getting the carry) on each of those risks. This is indistinguishable from insurance, particularly when the beneficiary of insurance isn’t the subj…
In your scenario, you are using gambling as insurance, and that's different. If you bet $20 on the Greenfeet it's not because something bad happens to you if they win.
If I’m the landlord of a pub in Glasgow, and Scotland get to the finals of Euro 2024 (we won’t, but work with me here), betting on Scotland losing the final is a reasonable hedge against the profits you’ll lose when everyone goes home depressed after the final rather than buying another round. Is that a contrived example? A little bit, but it’s structurally reasonable. (If you’re a sponsor of the Scotland team, gambling on the result could be hedging media risk).
Can you leverage yourself up? Yes, but you can do that in the stock exchange or futures market too. They’re all the same thing.
Insurance 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…
So far, I have made use of my car insurance policy two times. Each time I regretted it. First was for a rodent that somehow got into the space between the roof and the headliner, then died and made a mess. The second was for hitting a pothole at highway speed, which damaged a wheel and its control arm. In both cases, the insurance company paid the minimum they had to. For the rodent, sure they paid for the ceiling to…
As long as you have a few million set aside in case you cause one of the 45,000 deaths, or even more injuries, that happen on US roads every year, I agree with you.
But then you say exactly my point in your last paragraph… you’re all over the place here.
Insurance isn’t about pot hole damage. If you use it all the time, it’s a membership fee, not insurance.
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So far, I have made use of my car insurance policy two times. Each time I regretted it. First was for a rodent that somehow got into the space between the roof and the headliner, then died and made a mess. The second was for hitting a pothole at highway speed, which damaged a wheel and its control arm. In both cases, the insurance company paid the minimum they had to. For the rodent, sure they paid for the ceiling to…
Insurance is primarily for major events. The things at the extreme upper end of the bell curve. For example, you've hit another car (possibly an expensive one) and caused tens of thousands of dollars in damage. Or you've inured a passenger and caused hundreds of thousands of dollars of hospital bills. The kinds of events that would financially ruin you, or at least seriously set you back on your life goals. Or, in th…
That's how it should be, but isn't because all insurance contracts cap the maximum insured amount. So that's absolutely NOT the "extreme upper end of the bell", not at all.
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> it simply reduces variance Mostly I agree. That doesn't make it not gambling though.
If gambling and insurance were the same you would be able to both frame insurance as a form of gambling and gambling as a form of insurance.
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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.
Insuring your tires at discount tire/America's best tires is always worth it too.
I've been driving for 36 years now and have never had a tired damaged more than the very occasional puncture.
I could go out tomorrow and damage one, but by this point I can consider myself "self insured".