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Notes -
Lol. Charitable. How about being able to not only live longer but also live better lives due to improved social networks. Men who lose their wives are emotionally screwed, women who lose their husbands are widows and mostly fine.
I wrote the above before I saw that it's Mother's Day, lack of tact, mea culpa, etc.
To be clear, I don't want to just dunk on women — I like the women in my life and bear no ill will towards their sex. I'm just skeptical of uncritical complementarian narratives that declare that men and women are simultaneously unequal in their dispositions and yet equally valuable in their own domains, because it seems pretty obvious to me that men get the better deal. Earth Mother and Sky Father might be of equal value in nature, but the story of civilization has been of reaching to the stars with only a minimal umbilical connecting us to our roots.
If I were dictator, I'd look into ways of (eugenically or otherwise) partly relieving women of those traits which most negatively impact their eudaemonic potential (neuroticism, conformity, lower risk tolerance, lower agency) and augmenting their traits which legitimately compliment men's (verbal IQ, social intuition, physical endurance, sensual sensitivity).
It doesn't seem obvious that men get the better end of the deal in the current society, which is admittedly working pretty hard to make sure that they don't. They probably do have a better deal in a state of nature, but nobody who's posting on online message boards is living in a state of nature. Very obviously, whether it's more of a hinderance to be a neurotic woman or a man who can't control his temper will depend on what kind of society you're living in -- in ours it seems likely that the latter would be worse.
Why would you remove conformity? It seems useful for both the society and the individual that most people are fairly high conformity, and there are only a few highly disagreeable outliers.
Why should women take more risks? What kinds of risks should they take more of? We've probably gone a bit too far into saftyism, but high risk taking in men pays off in winning wars or having lots of sex with women they're attracted to. What does it get women?
I'm not sure what you mean about agency in this context. That they should be more assertive?
I guess the positives you listed would be nice to have more of. We can have even more aspiring novelists who run half marathons and organize aesthetically pleasing parties that they post on Instagram (though observationally this seems to be an occupation for thirty something women without children to show that they're still important, interesting, worth attending to, etc).
I suspect we’d all be super-rich. If you think about it, a very large part of society is structured as a giant insurance scheme, designed purely to mitigate the irrational loss aversion of people (especially women, but also men of course). Naturally, a lot of money gets lost in the pipes.
If I work in a developed european country, roughly half of my paycheck is immediately and largely unavoidably funnelled to insurance-like institutions to quiet the neurotic voice that goes ”What if you’re unemployed? What if you’re sick? What if you’re old? What if you die?”.
Well, what about it? I’d be worse off. Trying to financially compensate for the hypothetical loss is not rationally required. There is no good economic reason why one’s standard of living should never, ever sink.
All kinds of different things get thrown into the ‘risk aversion’ bucket. Driving a motorcycle drunk and naked and other young male antics are not low risk aversion, they’re high idiocy. The insurance problem strangling society should have its own term, ‘small loss aversion’. Financially, risk has been defined as volatility, which Warren Buffett and I think makes no sense.
Just replying to point out this is an insightful take, thanks for making it.
Thanks, it’s an under-appreciated state of affairs I like to harp on. We may be the descendents of winter people who always had to anxiously stack their grain, but we now live in a land where no one even remembers what true hunger feels like. Most financially literate people understand that it is irrational to insure your TV or phone against breakage, yet claim it is reasonable to insure anything bigger. Even your house burning down does not threaten your existence in any way, there is no need to preemptively hyperventilate by giving some slimy salesman thousands of dollars per year.
By the time you get up to the scale of home insurance, they're correct. That's how diminishing utility of money works. You have a risk r of losing v value from your total wealth of w, and your utility is generally an affine transform of log(w). r·log(w-v)+(1-r)·log(w) < log(w-r·v) for 0<r<1, so if somehow you could find someone who would insure you with no transaction costs or expected profit then you'd want to take it every time. Transaction costs c are roughly constant and expected profit P scales like p·v, though, so now your right hand side is log(w-c-(r+p)·v) and (for p>0 and c>0) you only get the same inequality for large enough v.
Gambling that you won't lose a few days' pay is a better bet than gambling that you won't lose (for the median homeowner considering home insurance) the majority of your net worth, even if the odds and the profit margins you're paying for are the same in each case, because bigger gambles are worse. This is the same reason why it's a good idea to invest most of your money in a stock market index, a worse idea to invest the same money in an average stock, and a crazy idea to invest most of your money in stocks at 4x leverage. It's one way to derive the Kelly criterion. For the same expected returns, less volatility is better, and since it's not infinitesimally better, it's still better even if it comes with slightly reduced expected returns. Your house burning down doesn't have to threaten your existence to be worth insuring against, it just has to be worse in expected utility than paying an insurer. You don't even have to pay a slimy one.
That is the high brow justification for it, but I disagree with how they model people’s utility functions, and besides, people’s utility functions are neither set in stone nor economically justified.
People would be far better off with a flatter, less utility-diminishing curve, given that they spend near half their income to slightly reduce lifetime income volatility, and if the last century is any guide, they want to spend even more, no future loss is too small to be tolerated, should it cost half of gdp.
There’s no real difference between the TV insurance and home insurance, it all depends on the assumed steepness of the diminishing utility curve.
People’s utility gets modeled as a steadily diminishing curve. In reality there should be one huge drop in utility when you go from from starving to non-starving income, and then very very flat. Because the only way to lose all future utility, to get wiped out in the kelly sense, is to die irl.
And on that subject, people also gamble. A lottery is very similar to insurance. You pay a small sum, and after a random event you sometimes get paid a multiple. It’s a negative EV transaction because the losses in the pipes are large. Any rational man with a sufficiently flat utility curve would reject them.
But one of the two is supposedly justified while the other breaks their model and makes no sense whatsoever. Gambling people are spending good, high utility money, then losing some in the pipes, and for what? To get low utility money.
Insurance
n. An ingenious modern game of chance in which the player is permitted to enjoy the comfortable conviction that he is beating the man who keeps the table.
INSURANCE AGENT: My dear sir, that is a fine house — pray let me insure it.
HOUSE OWNER: With pleasure. Please make the annual premium so low that by the time when, according to the tables of your actuary, it will probably be destroyed by fire I will have paid you considerably less than the face of the policy.
INSURANCE AGENT: O dear, no — we could not afford to do that. We must fix the premium so that you will have paid more.
HOUSE OWNER: How, then, can I afford that?
INSURANCE AGENT: Why, your house may burn down at any time. There was Smith’s house, for example, which —
HOUSE OWNER: Spare me — there were Brown’s house, on the contrary, and Jones’s house, and Robinson’s house, which —
INSURANCE AGENT: Spare me!
HOUSE OWNER: Let us understand each other. You want me to pay you money on the supposition that something will occur previously to the time set by yourself for its occurrence. In other words, you expect me to bet that my house will not last so long as you say that it will probably last.
INSURANCE AGENT: But if your house burns without insurance it will be a total loss.
HOUSE OWNER: Beg your pardon — by your own actuary’s tables I shall probably have saved, when it burns, all the premiums I would otherwise have paid to you — amounting to more than the face of the policy they would have bought. But suppose it to burn, uninsured, before the time upon which your figures are based. If I could not afford that, how could you if it were insured?
INSURANCE AGENT: O, we should make ourselves whole from our luckier ventures with other clients. Virtually, they pay your loss.
HOUSE OWNER: And virtually, then, don’t I help to pay their losses? Are not their houses as likely as mine to burn before they have paid you as much as you must pay them? The case stands this way: you expect to take more money from your clients than you pay to them, do you not?
INSURANCE AGENT: Certainly; if we did not —
HOUSE OWNER: I would not trust you with my money. Very well then. If it is certain, with reference to the whole body of your clients, that they lose money on you it is probable, with reference to any one of them, that he will. It is these individual probabilities that make the aggregate certainty.
INSURANCE AGENT: I will not deny it — but look at the figures in this pamph —
HOUSE OWNER: Heaven forbid!
INSURANCE AGENT: You spoke of saving the premiums which you would otherwise pay to me. Will you not be more likely to squander them? We offer you an incentive to thrift.
HOUSE OWNER: The willingness of A to take care of B’s money is not peculiar to insurance, but as a charitable institution you command esteem. Deign to accept its expression from a Deserving Object.
-Ambrose Bierce, The Devil's Dictionary
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