Well, insurance is just gambling with extra steps. Usually, you bet on something bad happening like your house getting burgled or your flight getting delayed, and the insurance company takes you up on that bet.
In a very abstract way there's not much difference between this and betting on sports.
I think this is too reductionist as an interpretation.
With an insurance (especially something like travel/home insurances) you are not trying to game the premium, you are rather protecting risk of a preexisting situation.
Sure you can use it to gamble, like buying a few dozen houses and hoping they catch fire sooner than later.
Similarly with the stock market, stocks unlike a casino chips do produce value and represent real quota ownership of an asset. It can be misused in similar ways but it posses distinct qualities.
You've identified a difference in motive between recreational gambling and insurance, not a mechanical difference. The woman in this article had different motives to the usual insurance customer.
The point is that one party says to the other "I will give you $X once a month, and if event E doesn't happen in that month, you get to keep this money, otherwise you must give me $Y (s.t.Y >> X)".
You can replace E with "my house burning down" or "The red team wins". In either case, I would call this a bet.
Insurance is just a specific type of gambling where you do it because E is bad and you want to be safe in case it does happen.
Insurance and gambling are the inverses of each other.
In gambling, the unlucky losers pay the lucky winners. The people who picked the winning horse, who threw the better roll of the dice, who invested in the right stock get paid.
In insurance, the lucky winners pay the unlucky losers. The people whose house burned down, who came down with a really expensive disease, who lost their jobs get paid.
Not really. I don't think the insurance company thinks of themselves as a lucky winner when they have to payout a claim. They lost the bet.
However, in theory insurance is more about pooling risk, where payouts from claims do not exceed premiums collected from the risk pool. Though sometimes insurance companies overextended themselves into places where they are not collecting enough from the pool to cover claims.
The insurance company isn't really taking the other side of the bet, it's the rest of the risk pool.
If you are lucky, you will never be seriously sick in your life, never lose your job, and never have your house burn down. If you are so lucky, all of that money you pay for insurance goes to the people who are less lucky.
Well, this is also how casinos work. Games are invented so that asymptotically, the gamblers will, on average, loose money.
Insurance companies achieve the same thing by setting your premiums according to whatever they assess the risk to be. Again, asymptotically, people pay more in insurance premiums than the insurer pays out.
Per narrator's comment above [1], a better way to explain the difference is that, for insurance, the insured doesn't want the event to happen, even knowing they'll get a payout, while in gambling, the insured wants the event to happen because of the payout.
This nicely aligns with what the practice of insurance actually involves: they do a lot to ensure that the client doesn't want the insured event to happen.
> You've identified a difference in motive between recreational gambling and insurance, not a mechanical difference.
I see also this one as needlessly reductionist. By that logic also taking a day off from work to interview for a new job is gambling.
The difference I gave are also more than just motive. With insurances you are supposed to desire the risky activity (owning an house, booking a trip, driving) independently from the payout, and moreover the transition to insurance in meant to decrease the variation in outcomes. Two characteristic entirely adverse to the nature of gambling.
In a Russian Roulette analogy, gambling is betting money on who wins pushing people to play more and more as the payout increases hoping to leave a winner; insurance is more complex, it is taking an already running game that you had already chosen to play for your own reason with no money involved and introducing a fee that will payout to the loser's family. You are not supposed to want to "win" that bet, actually it is part of the insurer job to make sure of that.
It is still in the category of "financial probabilistic interaction" which is just one of various requirements for gambling.
Gambling is priced as a game, a personal luxury. You pay quite little for a vanishingly small chance at a payout. Notice how there are very few people who actually ever "count on" a lottery ticket to pay out.
Insurance, on the other hand, is priced for the market. People will simply go somewhere else if the insurance company is taking too large of a slice.
In some cases, gambling can start to become insurance, if the gambling market is efficient enough. For example: "Matress Mack" when he insured himself against his "Free matresses if the Astros win the World Series" promotion using phone-in sports betting. Even in this case, however, the "insurance" seems costly at 13 million dollars!
There was a slumlord in my area that used to buy flood insurance before a major flood, and then put a bunch of broken appliances in the units, prior to the flood, to claim the damages.
What you are outlining are the "extra steps" that the GP was alluding to. We call it "risks" but it turns out to be a kind of a gamble that the insurance company takes us up on, but with the house advantage.
The major difference is that insurance is not supposed to put you in a better position than you were before the loss. (This gets slightly tricky when, for example, you insure an item at its replacement cost, instead of its depreciated cost...but that's about as far as it is supposed to extend.)
Except the part where losing your house ruins your life, meanwhile your team losing just ruins your evening. That is the key difference. I agree that for easy to replace items, insurance and sports betting is the same, thou. (If you bet against your own team)
Financial products can usually be traded for three purposes: speculation (or betting), hedging (or insurance) and arbitrage. The product is the same, the name of the action depends on what the buyer is trying to do.
But "insurance" isn't strictly a financial product (the kind that's traded on exchange). For example, if you buy life insurance, you can't then resell it (equivalently, I cannot buy insurance on your life) because that would cause some pretty unethical incentives.
You can buy life insurance for other people if there’s an insurable interest.
You actually used to be able to purchase life insurance on any other people, although you’re correct on why that’s a bad idea. The darkest examples would be companies in high risk work buying life insurance for workers, which reduces the incentives to provide adequate safety equipment.
You as a client may be unable to resell the insurance (for the unethical incentive reason you mentioned), but big bundles of life insurance policies are definitely traded on a secondary market by the insurance companies. This is called "reinsurance" and allows the insurance company to reduce volatility in cashflows, thereby decreasing capital requirements per policy written and this increasing the total amount of policies that can be written.
Yes, but hedge funds have a larger counterparty risk. Their hedge is more likely to not work out, than your insurance is to fail to pay up. (And this aspect of insurance is quite heavily regulated.)
People (typically) buy house insurance to manage their risk to a level that they will tolerate. This creates security and allows for greater investment in something.
It's actually completely different to sports betting...
It's actually interesting that a lot of countries has laws regulating gambling because of how destructive it can be for an individuals economy, life and general health. Yet, it's still possible for rich people to gamble using thousands of peoples homes and jobs as insert on the stock-market.
> Yet, it's still possible for rich people to gamble using thousands of peoples homes and jobs as insert on the stock-market.
Trading instruments like mortgage-backed securities does not constitute "gambling with people's homes." It's not like someone's taking your home away just because of some CDO trades.
"Activist investing" (think Icahn) might, albeit indirectly. But that certainly doesn't make up a big chunk of the market and its activites.
Who exactly lost their home while paying their mortgage on time?
I'm not saying that the GFC wasn't massive (it was) or that people didn't lose their jobs and homes (many did), but MBS were not at fault. Subprime lending was, among other factors.
MBS were the engine that kept a housing mania going. But as you said, they didn’t make people over leverage their own houses.
Arguably the originator banks deserve a lot more blame for that, since they actually were the ones willingly handing out bad loans and/or encouraging bad consumer practices.
No, you bet on nothing happening. Nobody wants to see their holiday ruined, their house burnt, or their health go to shit, but you get insurance so that IF it does happen, and you hope it doesn't, you won't get fucked over financially.
Gambling does increase risk, but it is not done TO increase risk. Risk is accepted (or embraced) to increase reward.
Of course it gets murkier when people talk about the “rush” of gambling, which is I think what you’re alluding to, but it’s not as straightforward as you make it or the most popular gambles would be those with the longest odds or the highest chance of complete ruin.
Insurance is about spreading loss around to make costs more predictable. Your house burns down, but since we're all paying into our insurance we all cover your costs so you can rebuild and not have your life irrevocably destroyed.
It's the opposite of gambling. It's about reducing randomness, insecurity, and financial shocks.
I haven't got my config to hand, but essentially I've binded leader-y and leader-p to copy and paste respectively both using the system clipboard. Since doing that tmux has been so much more useful to me.
This is the section of my config that sets up using the clipboard for tmux buffers. It won't work as is unless you're using both fish shell and Mac, but this should at least give you some good keywords to google and find documentation on how to do it for your system
I might be a little late to the party here, but I don't entirely agree with him.
What I do agree with: UIs have gotten worse on the usability front, this is undeniable. Each application does its own thing when it comes to layout, and each app is also subject to change so not only do new users struggle to find where a button is, but experienced users have to re learn the UI. I also agree that a lot of the bad changes to the desktop come from mobile. Something that works on mobile because of the small screen, limited horizontal space, and inaccurate input method will inherently not be the most efficient on a usually large wide-screen device with very precise input methods. There is also a large element of sacrificing usability for aesthetics which doesn't help.
What I don't agree with: I don't think we had ever reached a stage where we nailed usability. The "golden age" he talks about, with the file, edit, view menus weren't all that great. I remember using word 2003 and having to click through each menu and reading each entry one by one to find the option I needed because it wasn't obvious where it should live. The one advantage this system had was that every app used it and so everyone understood the paradigm, which is arguably a bigger factor to usability than the actual design.
He also makes it seem like (although I don't think he argues this point) every new innovation in UIs past a certain point were bad. But he also gives a counter example, the bookmark bar. Older web browsers didn't have this feature, it was something that came later. Some wizz kid one day implemented it and this feature happened to stick. We haven't solved UIs yet, and so we have to try new things in order to figure out what works and what doesn't.
Finally, I don't think the most important thing with many UIs is how easy it is for a new user to understand. Most people would agree that Vim has a great interface, but it just takes a while to learn it. This goes for a lot of specialist and professional applications, I'd prefer it to be designed to be useful for the veteran user, not the newbie, but with good documentation to make the learning as easy as possible.
Santander in the UK does this too. You can tell because they only ask for 3 characters out of your password whenever you log in. What's ironic is that whoever did that propably thought they were being super clever.
There is nothing in UK law that says banks have to store your passwords "securely".
Issues like this have been raised in the past, and authorities like the ICO have said no law is being broken. GDPR, for example, does not specify technical mechanisms required to store any form of data.
Unfortunately, they are still non-committal on what is required. They advise that passwords should be hashed, but there is nothing that makes that a binding requirement.
The gist is still "do what you think is appropriate".
The ICO talks about balancing risks and convenience, and the banks will argue that their systems are secure overall, and don't make the consumer liable anyway.
Under the ICO's guidance, an organisation could argue that plain text (or reversibly encrypted) passwords allow them to do things like password reminders.
You or I might think that's terrible, but they can argue that it's a better user experience.
If you store an individual character hashed then it is trivial to brute force it. I don't think there is a bcrypt work factor that you could use that would prevent brute forcing but would allow the individual character to be used for authentication.
I kind of see where they're coming from with this one, although I don't think it's true. The definitions of trivial and correct can be moved to fit whatever they're trying to say.
Rephrasing it as something like it's incredibly difficult to write a large piece of software with no bugs makes more sense. And I think for most organisations it may as well be impossible.
In a very abstract way there's not much difference between this and betting on sports.