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A few suspiciously similar arguments:

1) You should get insurance, because there is a tiny chance that you will win (ie, something bad happens and you cash in)

2) You should get Lasik, because the risk of complications is very low

3) You should invest in stocks (or mutual funds), because the risk of loss is low

4) You shouldn’t play the lottery, because there is such a tiny chance that you will win

5) You shouldn’t worry about getting struck by lightning, dying in a car/plane crash, etc, because the odds are small

6) You shouldn’t do something dangerous or unhealthy, because there is a risk that it will damage your body / health

Maybe the right answer just depends on the details.  How much cost and how much risk and how much do you win (or lose) if the low-odds thing happens.  Is there an objective way to determine the right action in a situation that involves an event with a low probability rate of occurrence?

But beyond that, I think these scenarios give us an example where we can ask the (philosophy) question about whether everything can have a an objective answer “right” vs. “wrong” ("correct” vs. “incorrect”).  This isn’t just an issue of how to best manage your odds to win a game.  This is a real life ethics and value issue.  Is it “good” to get insurance, or “irresponsible” not to?  If someone doesn’t get insurance, and then he/she faces a crisis, is it his/her own fault / problem?  Is it society’s responsibility, or the government’s responsibility to help?

Of course real life scenarios for this are not simple like boolean logic.  There are many variables.  In some situations there’s an obvious better answer, but many situations are more complicated.

However, in the interest of at least giving some opinion on the issue…  I personally tend to think that it is not psychologically pleasing to pay something for nothing.  I think it’s easy to be in the gray area of (risk vs. reward), and this makes it very difficult for me to justify something (such as getting insurance) when it’s not required or heavily subsidized.  But following that attitude is really bad for the few people who do get screwed over by bad luck.  I tend to have sympathy for a person who gets screwed by extreme bad luck.

So although I might still rant about something being required, having it required makes the choice easier, and having it subsidized makes you feel like you’re not getting ripped off (I guess even if the subsidy actually came from your own taxes or salary).  For example, a lot of companies give big discounts / subsidies for individual/family health insurance, and some insurances are legally required (renter’s, home owner’s, vehicle).

Finally, it is still the details that matter.  Having some sort of system to protect against really bad luck (natural disaster, theft, disease) for things like (health or house / vehicle) seems like a good idea.  But the specific details matter.

Ideally, it is for a society that is developed enough that it is low cost, not easy to abuse, and protects everyone from extreme bad luck scenarios.  In the very long-term, if the human standard of living for everyone is high enough, then there would be enough resources for insurance (against really costly / damaging bad lack) to be universal (even as universal an “human right”, or at least something that the human society is wealthy enough to easily afford for everyone).  But in today’s world, I think it’s more complicated since the cost is not entirely free / negligible.  In today’s world, I think it’s a good idea to have some insurance system(s) for protection against some form(s) of extreme bad luck; the details have some complexity.

Pem (Admin) :: Jul.06.2009 :: Philosophy and Opinions :: No Comments »

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