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Posted by spasmous on May 2, 2007, 5:02 am
A man aged 90 bet $200 that he'd live to 100, then did and won $50k.
What if I bet $100k (my entire net worth) that I'd live to 59 1/2
rather than put money in my 401k...? You think I'd get good odds? I
need 10-to-1 or better.
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Posted by kastnna on May 2, 2007, 9:27 am
> A man aged 90 bet $200 that he'd live to 100, then did and won $50k.
> What if I bet $100k (my entire net worth) that I'd live to 59 1/2
> rather than put money in my 401k...? You think I'd get good odds? I
> need 10-to-1 or better.
I am hoping your joking, but regardless you would never get 10 to 1
odds from anybody that can do math. That implies that to break even
the house would require that only 9% of the population to live to age
59.5 Suppose 11 people make that bet: 10 die, and 1 makes it (9%
survival rate). The house has paid out $1M and taken in $1M (10x
$100k). Far more than 9% of the population will make it to 59.5.
If 50% of the US population reaches their mid-80s (a fact) then I'm
speculating that 75% or so reach 59 1/2. The breakeven odds on those
assumptions is a 1-to-3 payoff ($33k return on a $100k bet).
By the by, the old guy got screwed. $50k on $200k is a 1-to-4 payout.
Even if only 1 out of 5 bettors aged 90 died before 100, they house
would break even. However, only 50% of them will statistically live to
age 94 (I wonder if they gave him a medical exam beforehand?). If
enough people made that bet to allow the law of large numbers to play
out, the house would make a killing.
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Posted by Dave Dodson on May 2, 2007, 9:48 am
>
> > A man aged 90 bet $200 that he'd live to 100, then did and won $50k.
>
> By the by, the old guy got screwed. $50k on $200k is a 1-to-4 payout.
Oops. The OP said $200, not $200k. That does make it a pretty good
return on investment: 50000/200 = 25,000%.
Dave
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Posted by kastnna on May 2, 2007, 12:05 pm
>
>
> > > A man aged 90 bet $200 that he'd live to 100, then did and won $50k.
>
> > By the by, the old guy got screwed. $50k on $200k is a 1-to-4 payout.
>
> Oops. The OP said $200, not $200k. That does make it a pretty good
> return on investment: 50000/200 = 25,000%.
>
> Dave
Oh yeah, my bad. That is a pretty good bet (250-to-1)!
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Posted by Don on May 2, 2007, 6:29 pm
>A man aged 90 bet $200 that he'd live to 100, then did and won $50k.
> What if I bet $100k (my entire net worth) that I'd live to 59 1/2
> rather than put money in my 401k...? You think I'd get good odds? I
> need 10-to-1 or better.
>
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