4 ms·

> the poorer a person is the larger a percentage they are willing to risk As a percentage, sure, but in real terms the poorer person doesn't have 'much' to los

> the poorer a person is the larger a percentage they are willing to risk As a percentage, sure, but in real terms the poorer person doesn't have 'much' to lose (to be regained) over someone extremely rich risking the same percentage. The potential rewards are also likely to be immensely larger in percentage for the poor person too. But this is also relative risk against wealth in context. Comparing poor against poor there will still be comparable poor people with completely different risk profiles (basic example is one with children vs one without). The model I imagine must primarily establish reasonable/full context before determining any value factors.

vannevar 7y ago
As a percentage, sure, but in real terms the poorer person doesn't have 'much' to lose (to be regained) over someone extremely rich risking the same percentage. This is questionable. The assumption that a poor person can more easily regain their stake is shaky---a poor person who loses their money may become homeless, which could in turn make it harder for them to be employed, or if they are a trades person maybe they lose their tools or can no longer afford to rent them. By contrast, a rich person has access to credit lines and investors in their social network. For the poor who aren't wiped out below a critical threshold, then, it may be true, but you're not taking into account the significant number who drop below that threshold and may never recover. I would rephrase the original statement, "the poorer a person the larger percentage they are willing to risk" as "the poorer the person, the larger percentage they are forced to risk if they want to achieve comparable returns on a percentage basis."
- kortilla 7y ago
  Rich people do not have access to credit lines if they don’t have assets to back the loans. And their rich friends certainly aren’t going to invest in someone who just lost a ton of money.
  - vannevar 7y ago
    That's better than a poor person, who does not have access to reasonably priced credit even in the unlikely event they have the collateral. And in reality, the rich often do have access to unsecured credit. They have that credit because they've made money in the past, and even if their current fortunes have turned, creditors and investors will often continue to invest in them.

vannevar 7y ago

As a percentage, sure, but in real terms the poorer person doesn't have 'much' to lose (to be regained) over someone extremely rich risking the same percentage. This is questionable. The assumption that a poor person can more easily regain their stake is shaky---a poor person who loses their money may become homeless, which could in turn make it harder for them to be employed, or if they are a trades person maybe they lose their tools or can no longer afford to rent them. By contrast, a rich person has access to credit lines and investors in their social network. For the poor who aren't wiped out below a critical threshold, then, it may be true, but you're not taking into account the significant number who drop below that threshold and may never recover. I would rephrase the original statement, "the poorer a person the larger percentage they are willing to risk" as "the poorer the person, the larger percentage they are forced to risk if they want to achieve comparable returns on a percentage basis."

kortilla 7y ago
Rich people do not have access to credit lines if they don’t have assets to back the loans. And their rich friends certainly aren’t going to invest in someone who just lost a ton of money.
- vannevar 7y ago
  That's better than a poor person, who does not have access to reasonably priced credit even in the unlikely event they have the collateral. And in reality, the rich often do have access to unsecured credit. They have that credit because they've made money in the past, and even if their current fortunes have turned, creditors and investors will often continue to invest in them.