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Yeah, when you think about it the lottery and insurance are surprisingly similar ideas, though a bit in reverse. Getting in an accident and winning the lottery
by haberman 15y ago
Yeah, when you think about it the lottery and insurance are surprisingly similar ideas, though a bit in reverse. Getting in an accident and winning the lottery are both unlikely. By buying insurance you remove the small chance of a large loss. By playing the lottery you create the small chance of a large win. Both reduce your expected value, and doing both even more so. If you buy both, your variance is still high but in the positive direction.
- batista 15y ago>Yeah, when you think about it the lottery and insurance are surprisingly similar ideas, though a bit in reverse. Getting in an accident and winning the lottery are both unlikely. Getting into an accident is far more likely. And everyone has health issues sooner or later, so the probability of that is 1.
- JoeAltmaier 15y agoIn fact, I've heard it said you are 7 times more likely to be hit by lightening, than to win the lottery. But I can't see how that could be: I've seen lottery winners, and on average they don't look toasted at all!
- philwelch 15y agoThe probability of being hit by lightning is massively diluted by the fact that most people don't live places where lightning is a serious threat. I've heard it's actually a serious risk some places.
- Retric 15y agoWell I have been hit by lighting so it does not seem that far fetched ;-)
- Fargren 15y agoWhen someone gets hit by lightning, you generally don't expect to see them again.
- haberman 15y ago> Getting into an accident is far more likely. True, but I didn't say anything about the constants involved, just the shape of the problem. > And everyone has health issues sooner or later, so the probability of that is 1. That may be, but health insurance premiums only cover a certain window of time, during which you may or may not have health issues.