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Monday, 26 April - link

I'll Make You a Bet, Chester

A friend could not believe I am planning to go to graduate school. "I'll make you a bet, Chester. I'll bet you're never going to get a Master's Degree."

"Okay!" I retorted immediately, "20 bucks! Why not."

"I'm thinking to raise the stakes," he replied. "I'll bet you $10,000 that you're not going to finish grad school."

My eyes popped out of my head, over the phone. "$10,000! No way - I can't afford that!"

"I'll give you 2:1 odds," he replied. "And twenty years."

So those are the terms. If I earn a Master's Degree ("none of that honorary shit, Chester" - I gotta slog through grad school) within 20 years, I win $10,000. If I don't earn a Master's Degree by 26 April, 2024, I owe my friend $5,000. "A PhD counts too," he suggested generously.

An odd incentive to attend, and finish grad school! And a long timeline. Like a personal long bet! I took him up on it; now I can start thinking of it as part of my financial aid package for grad school, or a long-term loan on nothing.

An edited sample of his rationale appears below.

"Let's analyze that bet a little bit. Even with the huge odds you're getting on this one, I still like my chances. Just to give you some perspective, since you don't have to pay up until 4/26/24, that gives you 20 years of inflation (assume a mean rate of 3%) to reduce your $5,000 in value to about $2,720. On the other hand, you could earn your degree as early as 2007, which would depreciate the $10,000 you stand to win to $9127. So, it would appear that you are getting better than 3:1 odds on your bet (3.36:1, actually). But, 3 years would be a very quick finish (especially for you), so I would put the expectation that, given you will get a degree, you will take about seven years to finish (remember, you may not even be able to start until 2005 or later), which would make my $10,000 worth about $8080, which puts your odds at just under 3:1 (2.97:1). So, what does that mean? It means you'll need to have better than a 25.19% chance of getting your degree in 20 years to make our bet a break even proposition. By the way, the 20 years time is largely irrelevant to your success in completing a degree. I figure if you don't get it in your first trip back, you never will. Anyhow, I put your chances closer to 5% or 10% tops, giving me a substantial edge. Perhaps you would disagree with that number, but I've been back to the Ivory Tower after learning the resplendant truth of what lies beyond. So too shall you, if you're not just lost in a pipe dream, and so too shall you learn why it just doesn't work."

Hah! I told him, you're driving me to grad school!

Posted on 26 April 2004 : 14:18 (TrackBack)
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Justin's Links, by Justin Hall.