WMD attack by 2013

Then what plans does he have for the disposal of his estate after his death? Almost everyone has legal heirs, even if they're distant family members we don't even know about. All of our tangible assets, including the substantial real estate most of us will have if we live to a ripe old age, passes to them.

Most people with no immediate beloved heirs (like my wife and me) prefer to bequeath it to people we've always helped support, household staff, a religious or political cause, or some other charity. In order to make that happen we write wills. The will is evidence that we do not consider ourselves worthless AND that in fact we are not worthless economically.

I have life insurance to take care of my wife in case I die in the few remaining years I have to work before retirement. The value is roughly equal to my remaining lifetime earning power. But if by some tragedy we die together, the proceeds of the life insurance goes into our estate and will be distributed along with our houses and other assets. The local animal rescue organization and the Central Asia Project will get quite a windfall, in part because my life has economic value.

Younger people who have no family generally don't bother buying life insurance, but it's not because they consider their lives as having no value. Quite the contrary: by saving the life insurance premium and adding it to their disposable income, they're spending that value now instead of letting it accrue to their estate.

Lots of people who do have families nonetheless fail to buy life insurance. Basically, they're gambling. Most forms of gambling are not played in casinos and are therefore legal.

 

Huh? What evidence have you provided in rebuttal? You didn't follow my presentation very carefully because insurance was only one factor. So you're not even rebutting accurately.

As I explained earlier, this is not about individual assessments; it's an actuarial calculation of the average monetary value of an American life. Actuaries take multiple factors into account. The amount people are willing to carry in life insurance is the lower bracket of the value, since many people are willing to take the gamble and either go without or under-insure. The upper bracket is the multi-million dollar judgment that juries award in a wrongful death suit. I also gave my own rough estimate, based strictly on earning power as a cold-blooded indicator of the value of a life. The present value of the lifetime earning power of an adult who's finished with school and already working is very roughly twenty times his expected average annual salary--depending on inflation and interest rates in the era in question. That's just Accounting 101. Well, maybe 201 anyway.

What's to retract?

 

Then please share the details of your competing economic model. What does the amount of any insurance policy measure? People ensure things for their replacement value, that's the whole point.

You can't replace the non-economic value of a person's life, which I've already clearly noted, but the purpose of life insurance is to replace lost earning power for the insured person's family. Life insurance policies are typically written for the discounted present value of several year's expected income, although typically they don't cover full lifetime expected income because everyone figures their family will eventually find a way to fill the void, such as marrying a new spouse.

Jury awards, as I've also clearly noted, try to go beyond that and compensate the family monetarily for their emotional distress.

My own figure of $2 million is a weighted geometric average of the two, weighted more heavily toward the jury end for the sake of argument. A while ago I read one report that the average American valued his life at $7 million, but I'm skeptical of it because very few Americans actually behave as if they do, and the report cited no sources.

This is pretty elementary stuff. Have you had a course in accounting, economics or risk management? If not, and you want someone to explain the basic principles to you, you should be asking your questions on the Business & Economics board. Perhaps someone else will chime in who can explain it to you more clearly than I've been able to do.

 

Value of American Life:

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/07/10/national/a110546D37.DTL

 

Huh? An example of equivocation please?

Actuarial mathematics, the utility of money function, present value calculations, and many of the things I refer to in my posts are beyond the average person. I expect the average SciForums member to be a cut above the "average person" in math, but not necessarily in the applied math of accounting and economics. As for statistics, even people with science backgrounds tend to be weak in it. And quantitative risk analysis, few people even understand that there is such a thing. I thought it was reasonable to ask if you have the educational background to follow all this, since most people don't.

I've done my best, but it's not easy to translate into layman's terminology.

I've tried and apparently have not communicated. Nonetheless since, as I pointed out, that assumption is fundamental to the entire concept of insurance, I think my question was quite reasonable: If that's not what it's evidence of, then pray tell what exactly do you postulate that it does indicate? If you're just trying to make the point that people are irrational and this entire line of reasoning is bogus because they're going to base their life insurance coverage on their horoscope, then say so. This is, after all, the country in which an increasing segment of the population can't make change for a dollar without a POS terminal.

Yes I did, at least twice. I clearly stated that there are other factors involved in the assessment of a life's financial value, one of which is jury awards, which are based on emotions and the assumption of deterrence.

Last time I counted, there were two of us here. So this is "our work," not "my work." I can't seem to find the post in which you presented your own figure and explained why it was more reasonable than mine. Can you please point me to it, since you seem to be claiming that your posts are "longer" on argument and evidence than mine?

 

Zap, I have responded with substance and academic-level clarity to every one of your criticisms. "Dodging" is not in my nature. I have an education in mathematics, accounting and economics, and I've been a professional risk manager, so I have no need to be vague or off topic.

Half the time I have no idea what the hell you're raving about. In case you haven't noticed, others agree, so it isn't just me. I do my best to try to figure out what you're looking for and give it to you, and all you do is come back with personal remarks that do nothing to resolve whatever misunderstanding might exist here. I suggest you add more substance and clarity to your own posts because your style of communication isn't working.

I've explained these issues exhaustively and there's clearly nobody left here who hasn't gotten it already. At this point I have no idea what part of this you don't understand, or disagree with. I have other things to do and I'm not going to continue re-analyzing the same principles of statistical asset evaluation, insurance, utility of money and risk tolerance from yet another perspective, until you can muster up a specific, on-topic comment or question.

If you're simply trying to say that you don't like the idea of placing a monetary value on human lives, I can respect that. Nonetheless, somebody has to do exactly that so we can make rational decisions about how much money to spend to save them.

 

I can't see any substance, since you haven't supported your contention with any evidence at all, as far as I can see.

 

Let us get back to the topic. Here is an excerpt of Mike McConnell interview with Charlie Rose.

MIKE MCCONNELL: It`s true. We normally talk about it when we have a forecast or dialogue with the Congress or set of members in the executive branch in terms of weapons of mass destruction. And I would put four items in that area. First is biological, then chemical, then nuclear. And what surprises many people -- cyber weapons, the ability to degrade infrastructure.

Of those four, the most likely is biological. The least likely is nuclear, but it is going to increase in likelihood from now until 2025. It`s a very small percentage, but it...

CHARLIE ROSE: A percentage of likelihood? Or a percentage of (inaudible)...

MIKE MCCONNELL: A small likelihood that it will happen, but it`s an increasing percentage.

CHARLIE ROSE: How do you measure that?

MIKE MCCONNELL: Probably the best way to say it is informed judgment. We have analysts who study these things and trends. And we have engaged. When we produce this estimate that we do every four years, we try to publish it at the end of November or December, before the president is sworn in for the new term, and the attempt is to try to serve the executive branch and the Congress in a way that says, here is our best guess, at the unclassified level, on what to expect over the next 20 years. We just published that in November. It`s on the Web site. Anyone can download it. Interestingly, as a sidebar, when we publish it, there`s no protection for it, so it becomes a best-seller in foreign countries as soon as they can translate.