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Gambling isn't wrong. Gambling is stupid. Hedging risk is not stupid. That's the difference.

andoando 2y ago
Insurance is stupid if you are wealthy enough to cover the damages on your own. Insurance for your phone, computer etc for example is certainly stupid for most people.
- ghaff 2y ago
  Generally speaking. I (rarely) buy insurance for things like travel when I have reason to think that I have circumstances that may lead to a higher probability of collecting insurance than the average person automatically buying it has. And I certainly have things like homeowner's insurance where losses could be catastrophic. But self-insuring for random relatively low-cost events mostly makes little sense for people as it does for companies.
- sailfast 2y ago
  Being wealthy enough to cover it yourself doesn't mean it's stupid to buy the option to avoid the downside if it's priced properly.
  - andoando 2y ago
    Insurance companies are always going to give you unfavorable odds, unless you think for some reason youre more likely than average to have an accident. I don't understand why car/home insurance isnt nationalized
    - cmrdporcupine 2y ago
      Car insurance is nationalized in a few Canadian provinces. https://en.wikipedia.org/wiki/Public_auto_insurance https://en.wikipedia.org/wiki/Public_auto_insurance
    - 4death4 2y ago
      Reducing variance in a random outcome still has value. For instance, you might have the money to cover an adverse outcome, but if you could guarantee you wouldn't need the money, then you could park it in an illiquid asset (e.g. some type of investment).
- martinflack 2y ago
  Many types of insurance that protect payouts to third parties include provisions that the insurer handles the lawsuit to defend the claim. This can be a convenience even to a wealthy person, especially one who doesn't get sued much.
- deleted 2y ago
  [deleted]
bee_rider 2y ago
IMO gambling gets a bad reputation by people who only look at the expected value. If you place a bet where the cost is low enough that it won’t make a qualitative difference to your life, and the possible (not expected) reward is such that it would make a qualitative difference in your life, then you might have maximized the probability of achieving that qualitative difference, despite lowering your expected value. This could be a reasonable strategy. I don’t gamble but I see why people do it. The toxic element occurs when the reduction in expected wealth does become enough to produce a qualitative QOL change.
- PartiallyTyped 2y ago
  I did this with GME shares in the original run. The profits helped me finish grad school. The money I bet wasn’t enough to cause serious issues on loss but the payoff was enormous. This is related to utility I suppose. Could we say that the “expected” utility of certain gambles is high enough to make them have higher utility than not betting?
- carlosjobim 2y ago
  > then you might have maximized the probability of achieving that qualitative difference No, you have only maximized the probability if you bet all of your money and all of the money you can borrow, beg or steal.
  - immibis 2y ago
    Utility is a non-linear and hard-to-estimate function of money. I may be almost as well off with $5000 as with $10000, since either case I can afford groceries until the next paycheck and still need to keep my job, but much worse off if I have $0, since I can't afford groceries, and much better off if I have $5,000,000, since I don't need a job, but not much better off from that if I have $10,000,000. If I can bet $5000 for a chance of $5,000,000 it might be worth it, but betting $10000 would leave me penniless and not increase my possible reward that much - what am I going to do, buy two mansions if I win? Buy a bigger one that I have no use for?
  - bee_rider 2y ago
jethro_tell 2y ago
However, being sold something like health insurance as hedging risk is bullshit. There is no risk in needing to provide healthcare to a population, its a given, though its not always equal cost per person. However, something like crop insurance allows one to take the up front risk of buying a ton of seed and machines while hedging against the off chance that drought, fire, pest or rain ruins a crop before it can be harvested months later.
- pdonis 2y ago
  > being sold something like health insurance as hedging risk is bullshit. More precisely, what is now called "health insurance" in countries like the US is mostly not insurance, because it does not involve costly, rare, unpredictable events, which are the kinds of events that are insurable risks. What should happen is that those kinds of things (for example, insurance against injuries in accidents) should be separate from the provision of predictable health care services, which most health care services are.
  - jethro_tell 2y ago
    To be fair, accidents and large health issues are relatively predictable in any population. What makes health insurance particularly predatory, is the attempt to carve around segments of the population to make money in something that everyone needs. Almost all accident insurance could be grouped under occupational and transportation related insurance. The remaining accident insurance would be insanely small across almost all segments of any population.
    - pdonis 2y ago
      > accidents and large health issues are relatively predictable in any population. Yes, which makes insurance feasible for such things to the extent that they are rare and unpredictable for particular individuals. (Note that many "large health issues" are not necessarily unpredictable for particular individuals.) > What makes health insurance particularly predatory, is the attempt to carve around segments of the population to make money in something that everyone needs. I think the biggest problem is what I said before, that what we call "health insurance" actually includes many things that are not insurance and should not be sold as insurance. If we remove the things that should not be insurance in the first place, I agree that what's left over should be feasible to handle using ordinary insurance practices as is done in other areas.
pdonis 2y ago
> Gambling is stupid. Not if the entertainment value provided is sufficient to compensate for the money lost. Not all benefits are monetary.
deleted 2y ago
[deleted]
randomdata 2y ago
There is no risk in which to hedge unless you gamble. If gambling is stupid, then hedging risk must also be stupid by association.
spoonfeeder006 2y ago
I would say that offering gambling to people, knowing that many are susceptible to the addiction cycle for whatever reasons, is what is the most wrong in this equation I think But then again you could also argue that those offering the gambling are themselves merely victims of a different addiction cycle involving greed or fear or whatnot
deleted 2y ago
[deleted]

Insurance is stupid if you are wealthy enough to cover the damages on your own. Insurance for your phone, computer etc for example is certainly stupid for most people.

ghaff 2y ago
Generally speaking. I (rarely) buy insurance for things like travel when I have reason to think that I have circumstances that may lead to a higher probability of collecting insurance than the average person automatically buying it has. And I certainly have things like homeowner's insurance where losses could be catastrophic. But self-insuring for random relatively low-cost events mostly makes little sense for people as it does for companies.
sailfast 2y ago
Being wealthy enough to cover it yourself doesn't mean it's stupid to buy the option to avoid the downside if it's priced properly.
- andoando 2y ago
  Insurance companies are always going to give you unfavorable odds, unless you think for some reason youre more likely than average to have an accident. I don't understand why car/home insurance isnt nationalized
  - cmrdporcupine 2y ago
    Car insurance is nationalized in a few Canadian provinces. https://en.wikipedia.org/wiki/Public_auto_insurance https://en.wikipedia.org/wiki/Public_auto_insurance
  - 4death4 2y ago
    Reducing variance in a random outcome still has value. For instance, you might have the money to cover an adverse outcome, but if you could guarantee you wouldn't need the money, then you could park it in an illiquid asset (e.g. some type of investment).
martinflack 2y ago
Many types of insurance that protect payouts to third parties include provisions that the insurer handles the lawsuit to defend the claim. This can be a convenience even to a wealthy person, especially one who doesn't get sued much.
deleted 2y ago
[deleted]

bee_rider 2y ago

IMO gambling gets a bad reputation by people who only look at the expected value. If you place a bet where the cost is low enough that it won’t make a qualitative difference to your life, and the possible (not expected) reward is such that it would make a qualitative difference in your life, then you might have maximized the probability of achieving that qualitative difference, despite lowering your expected value. This could be a reasonable strategy. I don’t gamble but I see why people do it. The toxic element occurs when the reduction in expected wealth does become enough to produce a qualitative QOL change.

PartiallyTyped 2y ago
I did this with GME shares in the original run. The profits helped me finish grad school. The money I bet wasn’t enough to cause serious issues on loss but the payoff was enormous. This is related to utility I suppose. Could we say that the “expected” utility of certain gambles is high enough to make them have higher utility than not betting?
carlosjobim 2y ago
> then you might have maximized the probability of achieving that qualitative difference No, you have only maximized the probability if you bet all of your money and all of the money you can borrow, beg or steal.
- immibis 2y ago
  Utility is a non-linear and hard-to-estimate function of money. I may be almost as well off with $5000 as with $10000, since either case I can afford groceries until the next paycheck and still need to keep my job, but much worse off if I have $0, since I can't afford groceries, and much better off if I have $5,000,000, since I don't need a job, but not much better off from that if I have $10,000,000. If I can bet $5000 for a chance of $5,000,000 it might be worth it, but betting $10000 would leave me penniless and not increase my possible reward that much - what am I going to do, buy two mansions if I win? Buy a bigger one that I have no use for?
- bee_rider 2y ago

jethro_tell 2y ago

However, being sold something like health insurance as hedging risk is bullshit. There is no risk in needing to provide healthcare to a population, its a given, though its not always equal cost per person. However, something like crop insurance allows one to take the up front risk of buying a ton of seed and machines while hedging against the off chance that drought, fire, pest or rain ruins a crop before it can be harvested months later.

pdonis 2y ago
> being sold something like health insurance as hedging risk is bullshit. More precisely, what is now called "health insurance" in countries like the US is mostly not insurance, because it does not involve costly, rare, unpredictable events, which are the kinds of events that are insurable risks. What should happen is that those kinds of things (for example, insurance against injuries in accidents) should be separate from the provision of predictable health care services, which most health care services are.
- jethro_tell 2y ago
  To be fair, accidents and large health issues are relatively predictable in any population. What makes health insurance particularly predatory, is the attempt to carve around segments of the population to make money in something that everyone needs. Almost all accident insurance could be grouped under occupational and transportation related insurance. The remaining accident insurance would be insanely small across almost all segments of any population.
  - pdonis 2y ago
    > accidents and large health issues are relatively predictable in any population. Yes, which makes insurance feasible for such things to the extent that they are rare and unpredictable for particular individuals. (Note that many "large health issues" are not necessarily unpredictable for particular individuals.) > What makes health insurance particularly predatory, is the attempt to carve around segments of the population to make money in something that everyone needs. I think the biggest problem is what I said before, that what we call "health insurance" actually includes many things that are not insurance and should not be sold as insurance. If we remove the things that should not be insurance in the first place, I agree that what's left over should be feasible to handle using ordinary insurance practices as is done in other areas.

pdonis 2y ago

> Gambling is stupid. Not if the entertainment value provided is sufficient to compensate for the money lost. Not all benefits are monetary.

deleted 2y ago

[deleted]

randomdata 2y ago

There is no risk in which to hedge unless you gamble. If gambling is stupid, then hedging risk must also be stupid by association.

spoonfeeder006 2y ago

I would say that offering gambling to people, knowing that many are susceptible to the addiction cycle for whatever reasons, is what is the most wrong in this equation I think But then again you could also argue that those offering the gambling are themselves merely victims of a different addiction cycle involving greed or fear or whatnot

deleted 2y ago

[deleted]