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The Magic Economics of Gambling
Wendover Productions
Posted 5 years ago by Ed in category: interesting
Comments (4)
DaveJoyce - 5 years ago [ Reply ]
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The prize linked savings account idea was super intriguing! I would totally save up for that. The study he mentioned occurred in Michigan where I live but I’ve never heard of it before.

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Noemoc - 5 years ago [ Reply ]
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The insurance argument is wrong. I buy insurance not because I think I will come out ahead. Rather, I CAN afford to lose several thousand dollars with 100% certainty, and can plan accordingly. I can NOT afford to lose tens or hundreds of thousands of dollars. So I happily lose a manageable, plannable amount of money to be assured of not losing a huge amount of money. I know my expected value is negative dollars, but that is fine because I can plan for it. Also, for gambling, people place a value on the fun of gambling and the excitement of the POSSIBILITY of a big pay off. This entertainment value gets brought up at the end but is ignored in the beginning. I agree with Dave that the prize linked savings account is a clever idea.

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DaveJoyce - 5 years ago
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  I agree. The concept of insurance seems to be getting lost in the public debate. I *want* a high deductible plan because I can manage the small problems, but I don’t want to have to deal with catastrophic problems that put me in bankruptcy.  

Ch1ll1ng - 5 years ago [ Reply ]
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Risk management is not gambling if you have enough money to pay for it. But if you have to seriously compromise to pay for it it becomes gambling.

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