Re:The Logic of Risk Taking
by jasonmclaren on Wednesday October 04, 2017 @11:51PM
(#15406579)
There are different ways to measure how much people value their lives. Some of the most interesting involve "revealed preferences", ie. what people actually do, not what they say.
For example, how much higher wages do people demand for riskier work, controlling for other factors? Or, how much extra do they pay for, say, a car with a better safety record?
I just checked the Wikipedia article on the "value of a statistical life", and apparently most current US estimates are around $9 million. This is up from around $7 million a decade ago.
Interesting that you think most people value their life over $6M USD. I bet you that across the entire world, more than 50% of adults would take a 15% chance of death to win $6M USD.
$6M is a life changing amount of money. Tempting...
Re:The Logic of Risk Taking
by bigmoneyajja on Wednesday October 04, 2017 @11:57PM
(#15406599)
I have that kind of money and I can tell you: there is nothing up here worth losing your life over. I certainly would not risk my life to keep my present lifestyle vs. the one I had in my early twenties when I made and had much less.
I wonder if you guys have spent time in Nepal, India or China or other poorer countries.
$1m is approximately equivalent to a lifetime earning minimum wage in a developed country. Most the world will never see such wealth.
The calculation calls for "$1m", not 6x$1m
When calculating expected cost/benefit, you take the value of the outcome multiplied by the probability of that outcome. So the expected cost to play Taleb's game of Russian Roulette is 1/6 * $6m = $1m, if you value your life at $6m.
Note that's a bit higher than the expected benefit of $0.833m, I kept the numbers round for brevity. The breakeven point would be:
5/6 * C_win = 1/6 * C_lose
C_win = 1m
C_lose = 5/6 * 6/1 * 1m = $5m
My point was that Taleb omitted this calculation entirely, which makes it an incomplete cost/benefit analysis.
Re:The Logic of Risk Taking
by ianamartin on Thursday October 05, 2017 @04:34AM
(#15407526)
Of course he forgot about the cost part of the equation. He’s the Deepak Chopra of the Malcolm Gladwell of the Freakonomics guys of the herbal remedy people.
A fucking clown.
Forgot to consider the "cost" in the cost-benefit analysis. Most would value their life significantly higher than 6*$1m, so the expected return is negative.