Viswanathan K's Thoughts

If someone tells you that everything has a price, it sounds very commercial, a bit cynical and perhaps, even evil. But that isn’t always the case. Mohnish Pabrai says that the US regulatory body for aviation puts the “worth” of a human life at $3 million. (This number is revised periodically, to adjust for inflation). But what does that mean ? “What that means is that if there is a plane crash and 100 people die, the first thing they know is that the human cost of the incident is $300 million.” Set aside your morality; and pay attention to what this approach translates into. So what is the impact of the $3 million price tag? Pabrai explains: “What aviation companies will do is look at the number of people that will die in some kind of reasonable period of time; they’ll do some models, and they’ll figure out what amount they have to spend. If they believe that 100 people are going to die if they don’t do anything, that’s $300 million. So they’ll ask themselves, “Can we f...

Hammurabi’s code, from almost 4,000 years back, includes the oft quoted construction law #229, something along these lines: “229. If a builder builds a house for a man and does not make its construction firm, and the house which he has built collapses and causes the death of the owner of the house, that builder shall be put to death.” Many people lament the lack of similar laws today. Not literally, but similar in spirit. After all, the benefits seem obvious, as the Farnam Street blog says : “Imagine yourself as a Babylonian builder. Each time you construct a house, there is a risk it will collapse if you make any mistakes. So, what do you do? You allow for the widest possible margin of safety. You plan for any potential risks. You don’t cut corners or try to save a little bit of money. No matter what, you are not going to allow any known flaws in the construction. It wouldn’t be worth it. You want to walk away certain that the house is solid.” The same article summarizes...