Where's An Actuary?

It occurs to me that this offer is one that it would be enlightening to test with data. Leaving the politics to the side entirely, is it a good deal?
A local attorney said he is giving his employees a $50 bonus each month if they choose to conceal carry.

“I was like so you’re going to give me $50 to carry a pistol? And he was like, yup that’s what we’ll do. Well sign me up,” said paralegal for Puryear Law P.C. Elizabeth Payne.

Carrying her gun at work gets her $50 extra each month from her boss.
Now carrying a pistol exposes you to a certain amount of risk. Even with near-perfect use, the danger that you will accidentally shoot yourself or someone else is higher if you handle a firearm every day than if you don't ever handle one. (So much higher that, even in Iraq, the Army made everyone inside the wire except guards on duty carry in condition green -- magazine not loaded, chamber empty, rifle on safe). Assuming you are properly trained and that you obey correct safety rules, however, the risk is not great. On the other hand, the consequences are potentially substantial: major medical bills or wrongful death lawsuits are quite expensive.

So, if I were an actuary writing you an insurance policy, would I charge you more or less than $50 a month to cover you for the additional risks?

Obviously that leaves out questions about how dangerous your neighborhood is, etc. It's also not about the politics: if you're a law-abiding American citizen, I fully support your right to keep and bear arms as you please. I'm just interested in how the money works out. Is $50 a good deal? Should a rational economic actor who is not otherwise inclined to carry, and who lives in a safe neighborhood where the firearm is unlikely to otherwise be useful to them, take such a deal if offered?

9 comments:

E Hines said...

Obviously that leaves out questions about how dangerous your neighborhood is, etc.

But it can't. The risks ambient in the environment in which carrying is occurring are part of the risk tradeoff that any true insurer must consider in arriving at a properly risk-adjusted premium.

Still, it's an interesting question. As things stand, with no insurance implication, yet, it is a good deal, especially if the weapon is already owned--a sunk cost. And with most decent pistols, the payback period at $50/mo for buying one to collect the bonus isn't unreasonable.

Eric Hines

Grim said...

Well, as long as you don't shoot anyone! :)

I'm curious about it as a kind of measure of the wisdom of doing it, but also because the concept is at odds with how I think about carrying a gun. I tend to regard it as something at least a little expensive -- and not really even because of the price of the gun, nor the ammo to keep in good practice with it. There's a cost involved in lugging the thing around everywhere, having to be responsible for it at all times, and the additional risks associated with the activity.

There can be good reasons to pay that cost: crime, to exercise and thereby preserve a right that might otherwise be lost, political commitments, or to be ready to defend others if you live in a dangerous area. Even where you are self-interested -- defense against crime -- the activity creates public goods that benefit everyone. That makes it a kind of honorable sacrifice in the defense of whatever that good happens to be: a sort of good citizenship.

Texan99 said...

Could it be he's not motivated 100% by safety issues?

E Hines said...

Much of that is (legitimately) political. Continuing to leave those aside, though, and assuming a measure of responsibility in the shooting of someone, the cost tradeoffs change radically: the emotional cost from having shot someone, however justifiably, and the fiscal cost of defending the shot on the one hand, vs the cost of leaving behind a widow from not having taken the shot.

That's a cost tradeoff I'll happily make in favor of carrying and being in a position to take the shot.

I had an extended (for him) discussion with a self defense instructor about the wisdom of finishing a fight on my terms vs knocking an assailant away and giving him a choice to disengage and depart. Putting aside his concerns about my trial outcome (I'll take the chance that no jury will convict me of attacking a man half my age and twice my size), there are three risks I will not run in such a situation: that having gotten the separation, he'll regroup and draw his weapon that he'd eschewed in his initial underestimation of me; that he'll regroup and attack as he'd just done but with better preparation; and that he will depart only to take another run at me or my family at another time and place of his choosing.

Carrying makes those risks far less: far lower in their own right and far less likely to be faced at all, even if I eschew the shot and only threaten one.

Carrying is better than not in general (see below), even in benign environments, unless it's outright illegal to do so. In those environments, the political risks of being unarmed get much greater and alter the tradeoffs in not easily predictable directions or magnitudes.

There's a cost involved in lugging the thing around everywhere, having to be responsible for it at all times....

Some of this cost depends on the motive for carrying, too. When some establishments became openly carry permitted (Starbucks?), some of the reaction (how dare Starbucsk!?) imposed a fiscal cost on those establishments. On the other side, much of the carrying in those establishments was deliberately display-oriented--not a subdued pistol on the hip, but big long guns ostentatiously strapped across the back. After a brief period of point-making, such displays become unnecessarily provocative, and from that counterproductive to the concept of carrying and the 2d Amendment's true purpose. Those are costs that need to be considered, too, in the decision to carry or not.

Eric Hines

douglas said...

Maybe it's just a very cleaver (and legal) means of screening potential employees...

I'd love to know how the numbers work out- and also what the rate of employees taking the offer is. If it makes fiscal sense, it could be a real boon to re-acclimatizing the average American with a culture where guns are normal.

douglas said...

oops- 'clever', or course...

J Melcher said...

I'd like to see a similar experience with home-owner's insurance.

Obviously a home known to contain guns attracts a certain kind of burglar -- who are after small, portable, high-value product to pilfer. A home with high total inventory of such property will have higher total claims for each instance of theft.

On the OTHER hand, a home known to contain guns repels a certain kind of burglar -- who are hoping to get in, get out, and get gone without any problem from dogs, rapid-response security forces, or, perhaps, armed home-owners. The overall number of instances of claims should be reduced by the percentage of burglars in the population concerned about such encounters.

If two companies took opposite approaches to the question, the natural experiment might be settled once the profitability data came in over the next few years...

Grim said...

...clever (and legal) means of screening potential employees...

That would be clever. On the other hand, any infiltrators would be armed. :)

Assistant Village Idiot said...

Related: I am a clumsy person with no aim. Shot poorly at camp as a child with both arrow and gun. Never hit what I throw a snowball at. Terrible at throwing sports. Hand shakes at every fine-motor task. Had to work twice as hard to be half as good a guitarist as my friends. I always said there would have to be riots in the streets before my family would be safer with me holding a gun. Four out of five sons shoot, but they aren't nearby anymore.