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But should you get insurance in case a meteor hits your house? Fires happen often enough, but some events are low enough probability not to worry about. A house
by goatlover 5y ago
But should you get insurance in case a meteor hits your house? Fires happen often enough, but some events are low enough probability not to worry about. A house being destroyed by a meteor strike isn't worth spending money on.
- deleted 5y ago[deleted]
- fighterpilot 5y agoX = P(bad_outcome) * magnitude_of_badness Y = your net worth You can trade-off one with the other. People with lots of Y will be more happy to reduce Y in order to reduce X, because the marginal utility of Y declines with larger values of Y, whereas marginal utility of X remains roughly the same irrespective of values of Y. > Fires happen often enough, but some events are low enough probability not to worry about. This ignores the second part of X, which is magnitude_of_badness. Your house burning down has a smaller magnitude_of_badness than society collapsing which will likely lead to death. It's also ignoring the marginal utility of wealth for large values of Y. Even if X is small, people with large Y will be more happy to reduce Y in order to reduce X.