economics of insurance(5)

Obviously, the law of diminishing marginal utility-which makes the satisfaction from wins less important than the privation from losses-is one way of justifying the above reasoning.This law of diminishing marginal utility tells us that a steady income,equitably divided among individuals instead of arbitrarily apportioned between the lucky and unlucky people whose house did or did not burn down,is economically advantageous (Also,when a family chooses to buy hospital and medical insurance,it may express the belief that this will be relatively painless,forced"saving against a rainy day." this self-imposed "compulsory-saving" feature is another benefit of insurance)
Quite a few nations and several of the states-New York,New jersey,New Hampshire, Massachusetts-have been helping pay for government and relieving the tax burden by introducing official lotteries and even off-track betting.The cynical notion here is that one might as well channel private vices to the public good.Also,there is the realistic consideration that law enforcement to rule out illegal gambling may be quite imperfect: legal gambling may be a way of checking organized crime.