Original Cin

Have you ever had an opportunity to bet your life on something you believe in? I’m doing exactly that, although the situation is complex, and requires a fair amount of explanation of my beliefs and my financial situation.

To begin, when I very young, my parents took out (multiple!) life insurance policies for me, with a benefit of roundabout $100,000 and premiums of about $631/yr. The idea was that I would grow up, start a family, and have cheap insurance.

Problem – I have no interest in having children of my own, and thus no reasonable beneficiary to name for these policies. I don’t see any good reason for me to have children, and I don’t exactly think I’d be passing on awesome genes. After reading a bit about the age-genius curve for men, I’m not all too sure a spouse is really all that great an idea. What were they doing before I died that they don’t have any passive income streams or career to rely on?

So with no beneficiaries (assuming I don’t die before my parents) and policies that pay only in the event of my death (as opposed to something useful, like policies that would give me money in the event of a sever maiming), these life insurance policies are utterly worthless to me. $100,000 will buy a lot of something, but nothing I can actually enjoy when I’m dead. Except, of course, that I just so happen to have an interest in cryonics, and the cost to be vitrified is (very roughly) $100,000. It’s also common to pay for vitrification by naming a company as the beneficiary of a life insurance policy.

On the other hand, I want to use the money I can receive from surrendering the policies to help me move to a better location and take classes. I figure that the present value of this lifestyle change, just from the expected improvement in income over my entire life, is $499,310 given an 8% discount rate. It’s actually probably worth a lot more.

So now, to crunch some numbers. If I lived to age 80, the cost of these policies would be $34,705. This may seem like I’m assuming I’ll live longer than I really will, but the people who publish life expectancy figures get around the problem of increasing life span by ignoring it, and you should expect to live beyond what typical online statistics would say your life expectancy is (how bizarre is that?). We honestly have no idea where medical technology is going — maybe the government will regulate improvements out of existence, and average life expectancy won’t improve a day. Maybe it will decline. Maybe they’ll be a huge leap in our understanding of longevity, and all of these calculations will be moot and I’ll live a very long time no matter what I do. The foresight exchange says there’s a 22% chance of physical immortality of some sort becoming a reality, but it doesn’t say how. 80 years is “good enough”

Now then, against this expected cost of $35K, I have to try to figure out the expected benefit from cryonics. First of all, no one knows if cryonics will ever work as intended. My gut instinct is to say that the probability that cryonics will work is P(0.02), but a more informed person hints at P(0.05). I’ll use P(0.03). An expected value is the probability of an event multiplied by its payoff (or, probabilities by payoffs, as it is). But how do you quantify “Holy crap! It’s fifty years after my death, and I’m alive again?! Yippee!”? I presume that the technology required to get someone who’s been vitrified up and running again ought to also be good enough to keep them running for a fair amount of time, at least enough for a second lifespan. The question then becomes the still difficult but at least well studied “What is the value of life?” Estimates are all over the place, but it turns out that $4.7M is a conservative value. Multiply by 3%, and the expected return on cryonics is $141K. This exceeds the $35K the insurance would cost, so it wouldn’t be a bad bet per se, but the difference is far less than the $499K that I believe the value of surrendering the policies would give me.

If I use the policies I have for cryonics, I lose ($499K + $35K – $141K = ) $390K! So, keeping the policies is a no-go, big time.

An argument given to me by the agency that originally sold the insurance (and wants me to keep it) was that fewer than 1% of term policies ever have a payout. I’ll take this as true. This leads to the second half of my thinking on the subject. The majority of term life policies are for people older than I am, and for a term of at least ten years. This means that my chance of dying in the near future is small. Very, very small. It could happen — I could suffer a heart attack, get hit by a bus, or be assassinated at random by terrorists. But the probability of that happening within, say, the next five years is negligible, much, much smaller than 1%. I’d be a fool to wager any sum of money on a random 25 year old dieing before they’re 31. This opens the door for me to have my cake and eat it too — I can, essentially, bet that I not die before I turn 31, and then begin establishing finances and other arrangements for vitrification.

Say that a 10-year policy would have a $5K cost. While I’m covered by the policy, I save away $10K a year (challenging but doable even if things don’t go as planned). Even with no interest on the money I save (absurd given the 8% discount rate from much earlier), I’d be able to afford cryonics outright when my insurance ran out. The total cost of this “manual” route is $105K. The benefit is the $499K I believe I can get from moving, the $35K I no longer need to spend on the current policies, plus the expected value of cryonics, $141K for $675K, minus the cost of this alternative plan, $105K, for $570K. Even better, when I’m 41, although I can’t do anything about the $5K I’ve spent over the previous decade, the remaining $100K is entirely within my control. If cryonics looks at that point like it’s a pipe dream, and some other life-extension technique looks much more promising, I can redirect the money however I like. Maybe I’ll have kids after all — $100K is a decent college fund, and if they don’t want to go to college, it’s cash, and can be used for anything else. Maybe I’ll use the interest I’m earning on it to take a vacation to an exotic location every year. Maybe I’ll just let the money sit around and compound in case I ever need it.

So, I bet my life, since I’m hoping I won’t die in the short-term, as “inevitable” as it may be in the very long-run.

Pirate ships had checks and balances on power.

As part of my 2008 campaign to “Create It,” I’ve decided to try to build a clock of my own design. This is, quite frankly, crazy. As a matter of fact, I have little experience with anything that I might use to create this project other than some halfway-decent programming sense.

Anyway, on to what I have in mind: A ring, on a square board roughly two feet wide. The ring acts a sort of pie chart of time, and updates in one hour increments (no minutes in my clock, I don’t believe in sweating the small stuff!). At 12:00 midnight, the clock is completely green. The clock then begins turning red, one hour block at a time. At noon, the ring turns yellow, and the process repeats until it cycles back to completely green again at midnight. The drawing above shows 4:00 PM under this system.

I’m thinking of using LEDs to light up the clock face, and I plan on picking some up to play with the next chance I get.

Serial entrepreneur Micheal Robertson takes the college board to task on the return to investment of college:

I am writing in regards to the “Education Pays” report that you co-authored for the College Board. I appreciate the College Board attempting to get information distributed about the financial value of a college education. I think this is necessary and valuable that young people and their parents have accurate and objective information so they can make informed choices about their future. Your report concludes that “[Higher education] yields a high rate of return for students from all racial/ethnic groups, for men and for women, and for those from all family backgrounds.” My belief after analyzing your report is that several critical errors were made in the data used to arrive at that conclusion. These errors and assumptions mean that the report does not represent the true financial picture for the average student.

….

According to your chart, the net difference in income after 40 years between a high school and college graduate is under $250,000. If one is to adjust the numbers using the changes listed above (-$421,441) then the financial benefit of a college education goes negative. Thus it would make more financial sense for the average young person to bypass college and simply graduate from high school and enter the workforce.

This tentative guideline to life is actually based on the title of one of the first blogs I encountered, The Skeptical Optimist. People think that there’s a contradiction between being skeptical and being an optimist, but it’s not true. I don’t think this actually goes far enough — I think it’s a good idea to be both cynical and optimistic.

Quite a long time ago, I was an avowed pessimist, and proud of it, thank you very much. I believed things were always getting worse, and virtually everyone who didn’t agree with me had an agenda of some sort.

I now believe that most people mean what they say. This isn’t because people are especially virtuous; it’s simply easier than lying. As economist Bryan Caplan puts it: “The legions of people who imagine that their opponents secretly agree with them are utterly deluded…. Sincerity is greatly overrated.” Also, on the subject of legions, there’s a legion of cognitive biases available to prop up your beliefs no matter what they are. So, people aren’t usually intentionally villainous, they’re just mostly self-interested and terribly biased.

But, none of that should get in the way of optimism. Often enough, people do the right thing, just because. Even if they didn’t, the result of the actions of greedy, myopic people can be something better than a dog-eat-dog train wreck, just because that’s the way society works.

Additionally, although you can’t change your personal circumstances, there is flexibility to your own choices which allows you to make the best of your own environment — if things are bad, make them better.

…it’s so important to observe how users actually behave versus the way they tell you they behave. People who do this professionally are called “economists” – Jeff Atwood, “Every User Lies“, Coding Horror