+EV for you, +EV for me (but morbid)

[RocketManJames]

Last night just as I was falling into a drunken sleep, this thought hit me. A while back there was a post about probability of dying at any given age, and the 50/50 line was really high, around 110 years old.

Anyway, say the probability that I will die in the next 3 years is 0.5%. I don't know the true number, but maybe that 's reasonable. Say I have $N to my name.

What if I sold 'death options' on myself that expire in 3 years. I will sell them such that you will be +EV. So, I will give 250 to 1, which is clearly better than the 199 to 1 truth. Even taking into account interest rates, this is +EV. And, from a utility standpoint, it'd be +EV for me as well, since money doesn't spend well after death.

Anyone think this would sell on eBay? Or on here?

-RMJ

PS: I'm only partly serious. Also, it would only be okay for me since I currently don't have a family that I need to support.

[spamuell]

I think setting up a system where people you don't know profit when you die and marketing that on the internet would be a pretty good way to shorten the odds significantly.

[MelchyBeau]

If I remember correctly there was a guy in England who made a bet that he'd live longer than 100 years. He was able to collect.

Melch

[pokerjo22]

nh sir.

[wacki]

[ QUOTE ]
I think setting up a system where people you don't know profit when you die and marketing that on the internet would be a pretty good way to shorten the odds significantly.

[/ QUOTE ]

Agreed.

Also RocketManJames, the 50/50 (not including aging) is around 1,000 years.

[GuyOnTilt]

Hey RMJ,

This is kind of interesting. Do you have a link to a chart that would show the probability of dying within the year at different ages, or one that I'd be able to deduce that from?

Also, I've been practicing my weboggle game and I've been told I might now be a match for you. Considered yourself bereby challenged. /images/graemlins/wink.gif

GoT

[RocketManJames]

Link to a Probability of Death by Age Table (http://www.ssa.gov/OACT/STATS/table4c6.html)

So, according to this table, for a male, it is about 106 years old to be 50/50 to die in the next year.

This is sort of a reverse-insurance policy. Insurance policies are meant to help those who will likely suffer hardships as a result of death. But, since there is no one that will be in that situation when I die (at least not now), it seems that there is "lost" value for me. So, I should be able to make up this lost value by taking up this reverse insurance policy.

I think while the idea is morbid and isn't wise for a number of reasons... there is merit to an organized system of these reverse insurance policies. A company could set this up, and allow people to come in and buy policies on people who they do not know, but only know of by statistics and demographics. Of course, the other side would be willing and able to put up the money to cover their payout if they die.

It should be more expensive to buy a policy on an inner-city minority teenager, than it would be to buy one on a twenty-something yuppie. But, since the price is determined by the payout rate the 'to die' candidate is willing to accept, there would certainly be a lot of +EV/+EV positions.

Ok, GoT... you're on next time I play. Seems you got real good real quick, or were you always a contender?

-RMJ

[pudley4]

[ QUOTE ]
Hey RMJ,

This is kind of interesting. Do you have a link to a chart that would show the probability of dying within the year at different ages, or one that I'd be able to deduce that from?

Also, I've been practicing my weboggle game and I've been told I might now be a match for you. Considered yourself bereby challenged. /images/graemlins/wink.gif

GoT

[/ QUOTE ]

Do you guys have any way of distinguishing your names on Weboggle? At work we always put a bunch of asterisks in front of our names so we know who's on. Eg. *********Jeff