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> If someone used a standard cost-benefit analysis [for russian roulette], he would have claimed that one has 83.33% chance of gains, for an “expected” average

> If someone used a standard cost-benefit analysis [for russian roulette], he would have claimed that one has 83.33% chance of gains, for an “expected” average return per shot of $833,333. Forgot to consider the "cost" in the cost-benefit analysis. Most would value their life significantly higher than 6*$1m, so the expected return is negative.

deleted 9y ago
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late2part 9y ago
Interesting that you think most people value their life over $6M USD. I bet you that across the entire world, more than 50% of adults would take a 15% chance of death to win $6M USD.
- deleted 9y ago
  [deleted]
- ryandrake 9y ago
  $6M is a life changing amount of money. Tempting...
  - bigmoneyajja 9y ago
    I have that kind of money and I can tell you: there is nothing up here worth losing your life over. I certainly would not risk my life to keep my present lifestyle vs. the one I had in my early twenties when I made and had much less.
    - late2part 9y ago
      I wonder if you guys have spent time in Nepal, India or China or other poorer countries.
    - goialoq 9y ago
      $1m is approximately equivalent to a lifetime earning minimum wage in a developed country. Most the world will never see such wealth.
jasonmclaren 9y ago
There are different ways to measure how much people value their lives. Some of the most interesting involve "revealed preferences", ie. what people actually do, not what they say. For example, how much higher wages do people demand for riskier work, controlling for other factors? Or, how much extra do they pay for, say, a car with a better safety record? I just checked the Wikipedia article on the "value of a statistical life", and apparently most current US estimates are around $9 million. This is up from around $7 million a decade ago. https://en.wikipedia.org/wiki/Value_of_life https://en.wikipedia.org/wiki/Value_of_life
ianamartin 9y ago
Of course he forgot about the cost part of the equation. He’s the Deepak Chopra of the Malcolm Gladwell of the Freakonomics guys of the herbal remedy people. A fucking clown.
goialoq 9y ago
The calculation calls for "$1m", not 6x$1m
- theptip 9y ago
  When calculating expected cost/benefit, you take the value of the outcome multiplied by the probability of that outcome. So the expected cost to play Taleb's game of Russian Roulette is 1/6 * $6m = $1m, if you value your life at $6m. Note that's a bit higher than the expected benefit of $0.833m, I kept the numbers round for brevity. The breakeven point would be: 5/6 * C_win = 1/6 * C_lose C_win = 1m C_lose = 5/6 * 6/1 * 1m = $5m My point was that Taleb omitted this calculation entirely, which makes it an incomplete cost/benefit analysis.

deleted 9y ago

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late2part 9y ago

Interesting that you think most people value their life over $6M USD. I bet you that across the entire world, more than 50% of adults would take a 15% chance of death to win $6M USD.

deleted 9y ago
[deleted]
ryandrake 9y ago
$6M is a life changing amount of money. Tempting...
- bigmoneyajja 9y ago
  I have that kind of money and I can tell you: there is nothing up here worth losing your life over. I certainly would not risk my life to keep my present lifestyle vs. the one I had in my early twenties when I made and had much less.
  - late2part 9y ago
    I wonder if you guys have spent time in Nepal, India or China or other poorer countries.
  - goialoq 9y ago
    $1m is approximately equivalent to a lifetime earning minimum wage in a developed country. Most the world will never see such wealth.

jasonmclaren 9y ago

There are different ways to measure how much people value their lives. Some of the most interesting involve "revealed preferences", ie. what people actually do, not what they say. For example, how much higher wages do people demand for riskier work, controlling for other factors? Or, how much extra do they pay for, say, a car with a better safety record? I just checked the Wikipedia article on the "value of a statistical life", and apparently most current US estimates are around $9 million. This is up from around $7 million a decade ago. https://en.wikipedia.org/wiki/Value_of_life https://en.wikipedia.org/wiki/Value_of_life

ianamartin 9y ago

Of course he forgot about the cost part of the equation. He’s the Deepak Chopra of the Malcolm Gladwell of the Freakonomics guys of the herbal remedy people. A fucking clown.

goialoq 9y ago

The calculation calls for "$1m", not 6x$1m

theptip 9y ago
When calculating expected cost/benefit, you take the value of the outcome multiplied by the probability of that outcome. So the expected cost to play Taleb's game of Russian Roulette is 1/6 * $6m = $1m, if you value your life at $6m. Note that's a bit higher than the expected benefit of $0.833m, I kept the numbers round for brevity. The breakeven point would be: 5/6 * C_win = 1/6 * C_lose C_win = 1m C_lose = 5/6 * 6/1 * 1m = $5m My point was that Taleb omitted this calculation entirely, which makes it an incomplete cost/benefit analysis.