Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

What makes gambling wrong but insurance right? (2017)

bbc.com

Post reply on HN
Print view View original

181–190 of 328 posts

Re: What makes gambling wrong but insurance right? (2017)

#181

Post by scns »

infecto wrote: post #175
michaelt wrote: post #171

Earlier quoted context omitted.

> People still say it's a scam though because their experience when making a claim doesn't play out like they expected. A friend of mine had her insured bicycle stolen. It was locked up with an extremely heavy chain and lock, which were rated 'gold' by insurance companies for locking up motorbikes. Her insurance denied the claim, because the chain wasn't gold rated for locking up bicycles. By all means get insurance…

Weasel? How do you expect it to work? There is a contract and the company is going to follow it.

They have lawyers preventing customers getting paid. One of those couldn't take it any longer and switched sides.

Re: What makes gambling wrong but insurance right? (2017)

#182

Post by blueflow »

This Question was the part of the Plot of Terry Pratchett's "Colors of Magic". The insurance there is explained like a bet that the tavern doesn't burn down. As a result, the tavern catches fire and causes the great city fire of Ankh-Morpork.

https://www.youtube.com/watch?v=BqxABYAKlCI#t=33m17s

Re: What makes gambling wrong but insurance right? (2017)

#183

Post by infecto »

scns wrote: post #181
infecto wrote: post #175

Earlier quoted context omitted.

Weasel? How do you expect it to work? There is a contract and the company is going to follow it.

They have lawyers preventing customers getting paid. One of those couldn't take it any longer and switched sides.

Perhaps in your narrative. I don’t believe that to be true for the vast majority of property claims.

Re: What makes gambling wrong but insurance right? (2017)

#184

Post by scott_w »

adw wrote: post #146
hattmall wrote: post #127

Earlier quoted context omitted.

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.

You’re using a tool and choosing to give the tool different names based on how you feel about it. 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…

No, betting on the Scotland game to try and hedge expected profit loss doesn’t turn it into insurance. The payout isn’t tied to the thing you want to hedge, so it’s just hedging your bets (gambling payout vs beer sales).

Insurance might be a kind of “hedging” but in a limited way that makes it not gambling.

Re: What makes gambling wrong but insurance right? (2017)

#185

Post by abenga »

lucianbr wrote: post #151
gmane wrote: post #105

Earlier quoted context omitted.

Hedging risk. This is often a hard concept for people to grasp: there is value to hedging risk. It (generally) cannot be turned into money. There is extrinsic value to reducing risk.

But you are only able to hedge the money part of the risk. Life insurance does not bring anyone back, and health insurance only repairs your health as much as can be done with money. You can't insure against incurable diseases, as in the risk remains. You will just get some money to hopefully feel better, or for your children. Same with insuring some painting let's say. You can get enough money to buy a different pai…

Yes, you are hedging against financial loss. Most of the other stuff you describe, e.g. sentimental value of one painting vs another, are irrelevant to insurance. You pay a (relatively) small amount to eliminate the risk or mitigate the effect of getting a massive (specifically financial) loss.

Re: What makes gambling wrong but insurance right? (2017)

#186

Post by mungoman2 »

bluecalm wrote: post #168

I feel the article as well as most of the comments miss the most important difference between the two. Insurance, assuming the fee isn't too high, increases your utility of money while gambling decrease it. If there is an event that happens 1 time in 100 that costs you $100k and you pay $1.05k to insure against that would have a negative expected value in money terms but positive expected value in utility of money te…

Hm I don't follow. Could you please define "expected value in money terms" vs "expected value in utility of money terms"

Re: What makes gambling wrong but insurance right? (2017)

#187

Post by TedHerman »

bluecalm wrote: post #168

I feel the article as well as most of the comments miss the most important difference between the two. Insurance, assuming the fee isn't too high, increases your utility of money while gambling decrease it. If there is an event that happens 1 time in 100 that costs you $100k and you pay $1.05k to insure against that would have a negative expected value in money terms but positive expected value in utility of money te…

https://www.foxbusiness.com/money/fred-smith-fedex-blackjack...

Re: What makes gambling wrong but insurance right? (2017)

#188

Post by Narkov »

bluecalm wrote: post #168

I feel the article as well as most of the comments miss the most important difference between the two. Insurance, assuming the fee isn't too high, increases your utility of money while gambling decrease it. If there is an event that happens 1 time in 100 that costs you $100k and you pay $1.05k to insure against that would have a negative expected value in money terms but positive expected value in utility of money te…

> With this in mind insurance is a service worth paying for as long as the fee is lower than utility you gain from it.

Insurance is invariably a "for profit" enterprise so the utility or return across all participants has to be lower than the value invested/paid. Clearly you are protecting an unlikely situation so the utility value of peace of mind would need to be quantified.

Gambling has utility too...entertainment. How someone measures that is up to them I guess. Excessive gambling, just like excessive insurance, is wasteful as well.

IMHO, I don't think your argument stacks up.

Re: What makes gambling wrong but insurance right? (2017)

#189

Post by SeanLuke »

thornewolf wrote: post #31
SeanLuke wrote: post #22

Insurance is just a form of investment. It seems to me that the primary difference between gambling and investment is that the utility of gambling (the expected return over time) is negative, and the utility of investment is positive. And that's it. In a casino, the gambler is gambling, while the casino is investing.

insurance is negative EV, like gambling, for the individual.

Actually, insurance is very often positive expected value for the individual. He's paying the insurance company $n, which the company reinvests for even higher expected value, which is how the company makes a profit even when it's paying out to its customers slightly more than they put in. It's essentially the bank model.

I suppose that even when insurance is negative, its primary function is to buy protection against being shunted to $0 value. You're paying value to eliminate risk.

Re: What makes gambling wrong but insurance right? (2017)

#190

Post by globular-toast »

sholladay wrote: post #121
Almondsetat wrote: post #5

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…

> Oh and they categorically consider hitting a pothole to be the driver’s fault, no matter the circumstances

Because it is your fault. How can someone force you to drive into a pothole at speed? Smooth roads build complacency, but you need to be on the lookout at all times. Most drivers are disastrously bad when it comes to understanding speed. Modern cars encourage awful habits.

Post reply on HN