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 
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