Thursday, August 17, 2006

Living in fear

Last night I was talking to my roommate about how I had lost my debit card last week and my new one had just arrived. During the course of our conversation he informed me that it is much safer to use a credit card because they have better fraud prevention features.

As he said, "Believe me, I'm a finance major".

The premise of the argument is that having your debit card misused can be more financially damaging than having your credit card misused. It follows then that you shouldn't use your debit card for the bulk of your transactions.

There are then 2 points I wish to raise.
1. Even if you are using your credit card for most transactions it does not protect you from misplacing your debit card and having it abused.
2. If you are using your debit card on a regular basis would you not notice its loss sooner?

In my case I realized my loss less than 24 hours after it occurred. Why? Because I use it that often.

Now, to get to the real point...

The thing I found most irksome last night was that the reasons given for using a credit card instead of a debit card all centered around what COULD happen, what someone MIGHT do. How HARD it would be to get charges reversed on a checking account instead of a credit account.

Ever get the feeling someone is trying to make you afraid of something? I did... Fear is a very effective way of controlling behavior. I'm not much for being controlled, especially by fear.

Let's look at another example of this.

We are told to be afraid of terrorists. Yes, they are bad people who want to hurt us. The only trouble with terrorists is that there aren't enough of them to go around. If you think about it on 9/11 roughly 2700 people were killed. There are 8.1 million people who live in new York city. That means (through dubious math) that there was a 1 in 3000 chance of being one of those people (not counting commuters). Those aren't good odds. When is the last time you made a 1 in 3000 bet hoping to win? The odds get even worse when you consider the population of the united states. That puts it up to 1 in 109000 chance of being killed.

Yep, sure is scary.

When looking at it like this it really helps explain the unreasonable search and seizure going on by government employees every day. If security doesn't make you dump out everything except baby formula you could end up being that one person in 109000 that dies! Now, if you consider that those deaths happened on one particular day then we must also consider the odds of being killed on one certain day.

Lets take today for instance.

It has been 5 years since the last major terrorist event. That means we have had roughly 1825 days since then. If you had a 1 in 109000 chance of death the day of the last terrorist event then the odds have been getting worse by 109000 ever since. That means that today you have a 1 in 198 million chance of being killed. These terrorists really need to step up their efforts if they are going to give us a reason to be afraid.

I don't know about you, but my life is way too valuable to waste on being afraid of odds that would make even the most compulsive gambler think twice.


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