by every man more or less over-valued, and
the chance of loss is by most men under-valued,
and by scarce any man, who is in tolerable
health and spirits, valued more than it is
worth.
That the chance of gain is naturally over-valued,
we may learn from the universal success
of lotteries. The world neither ever saw,
nor ever will see, a perfectly fair lottery, or
one in which the whole gain compensated the
whole loss; because the undertaker could
make nothing by it. In the state lotteries, the
tickets are really not worth the price which is
paid by the original subscribers, and yet commonly
sell in the market for twenty, thirty,
and sometimes forty per cent. advance. The
vain hopes of gaining some of the great prizes
is the sole cause of this demand. The soberest
people scarce look upon it as a folly to pay
a small sum for the chance of gaining ten or
twenty thousand pounds, though they know
that even that small sum is perhaps twenty or
thirty per cent. more than the chance is worth.
In a lottery in which no prize exceeded twenty
pounds, though in other respects it approached
much nearer to a perfectly fair one than
the common state lotteries, there would not
be the same demand for tickets. In order to
have a better chance for some of the great
prizes, some people purchase several tickets;
and others, small shares in a still greater number.
There is not, however, a more certain
proposition in mathematics, than that the more
tickets you adventure upon, the more likely
you are to be a loser. Adventure upon all
the tickets in the lottery, and you lose for certain;
and the greater the number of your tickets,
the nearer your approach to this certainty.
That the chance of loss is frequently under-valued,
and scarce ever valued more than it is
worth, we may learn from the very moderate
profit of insurers. In order to make insurance,
either from fire or sea-risk, a trade at all,
the common premium must be sufficient to
compensate the common losses, to pay the expense
of management, and to afford such a
profit as might have been drawn from an equal
capital employed in any common trade. The
person who pays no more than this, evidently
pays no more than the real value of the risk,
or the lowest price at which he can reasonably
expect to insure it. But though many
people have made a little money by insurance,
very few have made a great fortune; and,
from this consideration alone, it seems evident
enough that the ordinary balance of profit and
loss is not more advantageous in this than in
other common trades, by which so many people
make fortunes. Moderate, however, as
the premium of insurance commonly is, many
people despise the risk too much to care to
pay it. Taking the whole kingdom at an average,
nineteen houses in twenty, or rather,
perhaps, ninety-nine in a hundred, are not
insured from fire. Sea-risk is more alarming
to the greater part of people; and the proportion
of ships insured to those not insured is
much greater. Many sail, however, at all
seasons, and even in time of war, without any
insurance. This may sometimes, perhaps, be
done without any imprudence. When a great
company, or even a great merchant, has twenty
or thirty ships at sea, they may, as it were,
insure one another. The premium saved up
on them all may more than compensate such
losses as they are likely to meet with in the
common course of chances. The neglect of
insurance upon shipping, however, in the same
manner as upon houses, is, in most cases, the
effect of no such nice calculation, but of mere
thoughtless rashness, and presumptuous contempt
of the risk.
The contempt of risk, and the presumptuous
hope of success, are in no period of life
more active than at the age at which young
people choose their professions. How little
the fear of misfortune is then capable of balancing
the hope of good luck, appears still
more evidently in the readiness of the common
people to enlist as soldiers, or to go to sea,
than in the eagerness of those of better fashion
to enter into what are called the liberal professions.
What a common soldier may lose is obvious
enough. Without regarding the danger,
however, young volunteers never enlist so
readily as at the beginning of a new war; and
though they have scarce any chance of preferment,
they figure to themselves, in their youthful
fancies, a thousand occasions of acquiring
honour and distinction which never occur.
These romantic hopes make the whole price
of their blood. Their pay is less than that of
common labourers, and, in actual service, their
fatigues are much greater.
The lottery of the sea is not altogether so
disadvantageous as that of the army. The
son of a creditable labourer or artificer may
frequently go to sea with his father's consent;
but if he enlists as a soldier, it is always without
it. Other people see some chance of his
making something by the one trade; nobody
but himself sees any of his making any thing
by the other. The great admiral is less the
object of public admiration than the great general;
and the highest success in the sea service
promises a less brilliant fortune and reputation
than equal success in the land. The
same difference runs through all the inferior
degrees of preferment in both. By the rules
of precedency, a captain in the navy ranks
with a colonel in the army; but he does not
rank with him in the common estimation. As
the great prizes in the lottery are less, the
smaller ones must be more numerous. Common
sailors, therefore, more frequently get
some fortune and preferment than common
soldiers; and the hope of those prizes is what
principally recommends the trade. Though
their skill and dexterity are much superior to