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Oh I know that. I've been reducing my insurance as my financial position has improved. I think almost nobody on this forum would buy insurance on low value item
by froindt 7y ago
Oh I know that. I've been reducing my insurance as my financial position has improved. I think almost nobody on this forum would buy insurance on low value items, as the math and straightforward probabilities explain themselves.
But there are many people who don't understand the math or theory of insurance. And those people often have less overall education and earning potential. And those people are getting swindled hard.
- Pigo 7y agoYes, I think that was my original point. If I get duped, then it doesn't hurt me that much. But there's a lot of people who are on fixed incomes, or just not that bright, and this hurts them.
- lotsofpulp 7y ago> But there are many people who don't understand the math or theory of insurance. And those people often have less overall education and earning potential. And those people are getting swindled hard. I find that most people have such an emotional loss aversion, that there is no point to explaining the math or the simple concept of only insuring losses that you can’t afford. You can even try to show them that if the grocery store offered insurance for a cucumber, would they buy it? And they will say no, and if you ask why, it’s because they can buy another cucumber for not much money. But then they will turn around and buy insurance for a TV that costs a few hundred dollars, even though they can very well afford a new TV. So I stopped seeing it as people getting swindled. What I see as having negative utility, they percent as positive utility due to the emotional comfort it provides.