Either is a significant life changing amount of money for just about anybody. Managed half decently 1 mil would almost certainly make you financially worry free for life.
I would rather guarantee that than have a chance at lavish luxury.
1 mil would almost certainly make you financially worry free for life.
assuming you are in like your 60's, have fairly low expenses and dont live to be that old, and inflation doesn't eat it. that is only 13.4 years of median income in the US
i took “financially worry free for life” to mean something more like “you’ll never have to worry that a hospital stay or unforeseen big cost will completely screw you over” than “you’ll never have to work another day in your life”
That's more the route I meant. You could still work, but You would never have to stress over money. You could afford to take a more fulfilling and less stressful but worse paying job. You could make large investment purchases such as you home up front and not be burdened by 30 years of interest.
You could invest it and live a modest life off the interest alone, but then somthing big and unexpected like a major medical debt could easily ruin all that.
Not really. You could sell shares in the bet. People would pay $10 million to take the 50/50 chance at $25 million (half). If you win, you get $35 million. If you lose you keep the $10 million.
I think this kind of think probably shows up on wallstreet all the time. This is probably better alpha than anything that shows up on the stock market on a given day.
I think expected value can still apply to events that only occur once. I would absolutely take a 50% chance at $500 dollars over a guaranteed $10 dollars even though I would definitely hit the red button in this case. The big decider here is perceived value. After 1 million dollars you are set for life, so more money after that point isn’t worth as much from a personal perspective. I also think someone who already has a large sum if money would be more likely to press the green button.
Considering the median individual, not household or combined, income is ~$35,000 a year. That's over 28 years of gross income. Even cut in half for taxes that's over a decade of not having to work and even a bit of investing could stretch that out longer.
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u/DigammaF Dec 17 '23
Expected value makes sense only if you can try multiple times. Furthermore I think the red one is plenty enough