Expected Value (EV) in Life

The more poker you play, the more you will start to draw connections between poker and life.  Like poker, life is a constant presentations of choices, decisions and consequences.  Some people make good choices (+EV), others make bad choices (-EV), and the government always gets paid the rake (Taxes).  Here are some spots where I’ve been seriously considering EV:

  • Paid Parking: If you have an understanding of the frequency at which a meter maid checks cars for parking permits, if it will cost you less to not pay and risk the ticket.  If for example, it costs $10 to park for any time period between 9:00am and 5:00pm. If you get a ticket, it costs $30. The meter maid comes 3 times per day. Do you think you should pay for parking? (Tip: the length of time you plan to park greatly impacts your EV)
  • Insurance: When you purchase insurance, you are basically betting the insurance company that you will not get into a car accident, or get sick, or your house won’t burn down, etc. Insurance companies are smart, their bets are almost always +EV.  Do you think you should pay for insurance? (tip: Think Bankroll management)
  • Banking: Think of a bank proposition to a customer:  Give me your money, I will lend it to others and make a profit, and I will charge you a monthly fee, and I will charge you when you want to get access to your money – but I will pay you 0.05% interest on what you keep inside and guarantee it’s security. With all that in mind, what has more monetary expectation? Banking or keeping cash?
  • Pirating Software, Music, Movies etc – We all see the FBI copyright notices that appear at the beginning of movies, they speak of spending time in prison and fines up to $50,000 for copyright infringement. We know that if we download movies and music illegally, our internet service provides can probably track it. We also know that downloading music and movies from iTunes is way cheaper than purchasing CDs and DVDs.  Is it +EV to pirate digital files? (Tip: Think of preflop equities against multiple opponents).

There are tons of examples that I will no doubt cover in future articles, but for now, have a ponder at some of these spots and let me know your thoughts in terms of expectation in the comments. I will release a follow up article that discusses my thoughts in all of these spots.