[QUOTE="coolbeans90"][QUOTE="nocoolnamejim"] Granted. But for the folks where $1M guaranteed overcomes the expected value on a 50/50 shot at $1B, do you really think that the END RESULT outcome is going to be that a lot of individuals are going to turn a $1M guaranteed into more than the expected value (EV hereforth) of a 50/50 $1B? When you factor in inflation and time value of money, it's going to take a really Will Hunting level of floor mopper or homeless dude intellect for the math alone not to say that the 50/50 shot isn't the correct answer. I'm a reasonably smart dude, but I doubt that I'd be able to turn $1M guaranteed into a better end result than a 50/50 on 1B RIGHT NOW over my lifetime.
Even if people assume I'm not as smart as I think I am (okay...reasonable assumption) this isn't $1M vs. a 50/50 against $10M. It would take a Albert Einstein level brain for the expected end value not to argue in favor of going for the $1B.nocoolnamejim
Read what I wrote: not all dollars are equal. In short, the last ~ $985 million aren't going to drastically increase the quality of life, even if the sheer amount money is that much more. It's a simple matter of diminishing marginal utility. The million never going to be turned into $.5 billion, but it's readily going to be turned into 8-digits, provided the guy isn't an idiot - and that, in short, guarantees a reasonably comfortable life in the future. Starting with a million bucks at the age of 20 is enough to be wealthy upon retirement, even factoring in things such as inflation. Conversely, the 50/50 shot at a billion 1) Doesn't guarantee a noticeably quality of life in the long run (short term consumption would need to be deferred in order to invest) and 2) has a 50% shot of losing a reasonably high quality of life.
You're assuming everyone has the ability to make reasonably intelligent investments and decisions. In other words, you're taking a more optimistic viewpoint of the theoretical 20 year old that I'm taking. I agree in theory that someone handed a million dollars at the age of 20 SHOULD be able to make intelligent decisions to have a very comfortable standard of living from there onward.Where I disagree with your end conclusion is on three key points: 1. The marginal difference in value between $1M and $1B. These are orders of magnitude different. With $1B you're talking about never having to work again IF (and this is a big if) you're not an idiot and able to make some sound and wise decisions with that $1M. (I think you overstate the odds of people not being idiots.) With one BILLION, you're talking about possibly buying the Yankees. (Exaggeration to make a point.) 2. I think you overstate the financial knowledge of the layperson. You, my noble and friendly Beans, are a smart individual. A common thing that smart people do is assume everyone else around them is also smart "enough". In other words, you don't really fully think about the worst case scenario to the question, "How badly could someone blow a million bucks?" You ignore folks like Scottie Pippin, Antwan Walker and Allen Iverson that have made over a hundred million dollars and are now broke. I work for a Fortune 100 company. My company has decided to outsource certain positions to low cost providers in other country. Literally today I got asked, "Do I need management approval to increase our standard pricing markups over what we normally charge?" (In other words, the individual wanted to know if they needed to double check if it was okay to charge MORE than our default standard amounts.) 3. What you can do as a millionaire vs. a billionaire. And this contraceptive thing, my gosh, it's [so] inexpensive. Back in my day, they used Bayer aspirin for contraceptives. The gals put it between their knees and it wasn't that costly. Rick Santorum supporter
This dude is donating millions of dollars to Rick Santorum, literally reshaping the mainstream of political discourse in the Republican party, with the viewpoint that the acceptable viewpoint of sexual education is that women should put a Bayer between their legs and cross them to make sure nobody gets between their legs. The guys a effing Neanderthal but it also a billionare. He matters. Thanks to the fact he's obscenely rich, mainstream public discourse on sex ed includes the term "Cross the biitch's legs to prevent pregnancy". You don't have that power as a mere single millionare.No, I am assuming that I am capable of not spending money like a drunken idiot. Moreover, the comfortable standard of living, depending on the disposition of the 20-year-old, might be put off in order to live a normal life while interest accrues.
1. Yes, it's orders of the magnitude more money; it's not orders of the magnitude more useful to one person. The fifth yacht isn't nearly as useful.
2. I guess I'm not stupid, but by no means brilliant, or even that far above average. I think I bombed a mechanics of deformable bodies test today.
3. I get that billionaires matter, in terms of influence, far more than millionaires, and their influence more than likely directly scales in proportion to their money; this is an area in which I overlooked the advantage of the billion(s), but in all honesty, this facet is probably not the first thing that people base this decision on.
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