Plan: probability when there are payoffs.
I really did what I planned. A few easy calculations on the fair price of a raffle ticket: (total payout)/(# of tickets). Lots of confusion about the average value of a ticket – is that the fair price, or the fair price less what the ticket cost (which could lead to a negative answer). Maura and I have rewritten the text several times in hopes of making this clear, and seem to have failed yet again. Perhaps its time to stop trying. After all the students do seem to understand the idea. It’s just the vocabulary that confuses them. When that happens, why not scrap the vocabulary?
Then it was time for lecture/discussion -essentially, the house advantage in any gambling situation. We’d discussed the PTA raffle. Then state lotteries (essentially a regressive tax, since poor people are more likely to play). I told them about roulette. In these situations, gamble for the thrill,or the pleasure of expectation if you win, but not to make money. Just know you’re going to lose (on average).
On to with a discussion of insurance as a lottery you want to lose. Should you have to play? Taxes support the fire and police departments, even though no citizen wants to need their services. You can’t choose not to pay your fire department part of the tax and tell them not to come if your house is on fire.
Finished with a frankly political discussion (actually, lecture – they don’t have to agree with me) on the importance of universal health insurance. (Whether privately managed as in Romney/Obamacare or publicly, as in medicare/single payer.) Healthy people have to buy insurance to keep the average premium low enough, even though they probably won’t collect. In fact, medical services are like the fire department. Everyone is treated at the emergency room; society at large (i.e. all of us) pick up the tab for the uninsured. They aren’t left to die in the streets. The fire department comes even if they’re delinquent in their taxes.
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