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Insurance - especially electronics - is nothing but statistics where you, the consumer, are kept in the dark.

In an established industry it isn't too hard to calculate/predict the failure rate and costs associated with it.
But dividing those total costs over the number of units you get the non-profit insurance cost.
Here is the trick: you are charged about 5 times that much.

Statistically speaking, it is highway robbery.
But those few who actually get their unit repaired/replaced by paying some $50 over 5 years will always keep this discussion going...

Diogen.

diogen said:

Insurance - especially electronics - is nothing but statistics

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If you buy insurance without realizing that a company is making profit, then you're pretty stupid. I don't think anyone really falls into that category. However, to say that insurance is "nothing but statistics" is simply not true. Insurance is statistics and psychology. The benefits consumers get from insurance, with regard to psychology, are two-fold: First, many folks place a significant value on peace-of-mind, that they will not face the prospect of a large repair/replacement expense, which they didn't budget for in advance. Second, some folks place a value on avoiding the frustration of having to pay more for something, to repair/replace, it, after they already paid to purchase it. These are both intangible, unquantifiable benefits, but benefits all the same. Star Trek's Mr. Spock, of course, would never perceive such benefits, but perfect reasonable humans can and do.

bicker said:

If you buy insurance without realizing that a company is making profit, then you're pretty stupid.

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I think buying extended insurance is stupid and therefore don't do it. Never regretted it.
Do you know the difference between 5% profit margin (Dell's PCs) and 75% (extended insurance)?

bicker said:

However, to say that insurance is "nothing but statistics" is simply not true.

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I think you don't know what statistics is. Hence, we don't have a discussion point.

Diogen.

diogen said:

I think buying extended insurance is stupid

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You said something like that earlier. What I pointed out (and you apparently missed) was how that was myopic -- how you failed to consider that reasonable people can buy things not only because it is the best financial decision.

diogen said:

Do you know the difference between 5% profit margin (Dell's PCs) and 75% (extended insurance)?

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What an idiotic question. Is there something wrong with you?

diogen said:

I think you don't know what statistics is.

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I taught economics and business statistics in a highly-rated university.

However, I also know about people, something which you seem to be lacking.

bicker said:

You said something like that earlier. What I pointed out (and you apparently missed) was how that was myopic -- how you failed to consider that reasonable people can buy things not only because it is the best financial decision.

What an idiotic question. Is there something wrong with you?

I taught economics and business statistics in a highly-rated university.

However, I also know about people, something which you seem to be lacking.

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WTF? Can you read?

Reasonable people do unreasonable things... OK. This is what I said in a post above yours 3 days earlier... Whether they can be called "reasonable" is open to discussion...

My first post in this thread about extended insurance being statistics had nothing to do with psychology and other non-quantifiable crap.
I thought it was obvious. Even for non-teachers.

Taught economics? Let me guess: Chicago school? Econometrics?
Business statistics? That's an oxymoron. Am I glad not having to study at your university...

Diogen.

Don't insult Bicker. He enjoys controversy, hence his name.

I pay DHPP (Service plan now, I guess) each month. Sort of an extended warranty. It buys me peace of mind and no sudden large bill at any given time.

I bought the Sears extended warranty as a package on all our appliances that we bought from Sears. Covering 5 was hardly more than covering 2 or 3. Why did we buy it? We got tipped off by a service tech we trusted about the unreliability of a couple of the appliances we bought. And it turned out, Sears has lost a chunk of change on us. Serves them right, for building and selling items of questionable quality (due to cost cutting decisions they made). We bought an expensive gentle, water saving washer. Turned out it was so unreliable, Sears lost a class action on it. Made the lawyers wealthier, we got nothing.

I don't buy extended warranties on electronics.

diogen said:

WTF? Can you read?

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Of course I can read.

Just another one of your ridiculous comments.

diogen said:

Whether they can be called "reasonable" is open to discussion...

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Only by the maniacally inconsiderate or self-centered, but yes, such folks can cast such aspersions on others for such vacuous reasons. They're entitled to do so if they wish.

diogen said:

My first post in this thread about extended insurance being statistics had nothing to do with psychology and other non-quantifiable crap.

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Yes, I know. That's the part of your message that I corrected in my first reply.

diogen said:

Taught economics? Let me guess: Chicago school? Econometrics?

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Uh, no. Real economics in a real university, where they teach both science and humanities, so students' education can be well-rounded. I suppose there are schools these days that let you get a degree just learning science.

bicker said:

Only by the maniacally inconsiderate or self-centered...

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That pretty much says everything about your science background...

Look, science has many deficiencies. The biggest one - it very rarely answers real-life questions since its axiomatic base isn't rich enough to cover real life.
But in that very rare case when it is able to model real-life events - Is it worth to buy extended insurance on home electronics? is one of them - it gives one definite answer.

Arguing with scientific conclusions has been proven futile over centuries - just look at the history of religion.

Does this mean extended insurance won't be sold anymore? No.
Does this mean it won't be bought? No.
6/49 gives you one in 14 million chances to win and people are playing like there is no tomorrow...
Does this prove science wrong? No
Does this mean people are stupid? Now you are talking...

Statistics gets a bad rap mostly because most of the textbooks start with the flipping coin example and that makes Joe Six-pack believe he understands...
Business statistics is somewhere half way: 2+2=4 most of the time...

I do numbers for a living. Always did. And I don't argue anything but numbers...
And thankfully there are still places where you can get a degree studying science only without digging into the definition of "reasonable"...

Take care.
Diogen.

diogen said:

That pretty much says everything about your science background...

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No, it actually says nothing about my science background. What it says something about is that I have a broad foundation for what I'm saying, instead of a narrow foundation.

diogen said:

I do numbers for a living. Always did. And I don't argue anything but numbers...

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And that's the problem. Life isn't just about numbers. Humanity goes beyond numbers.