Emotional Insurance

As I promised two days ago, here's a post titled Emotional Insurance, in which we will explore, among other things, why I placed $80 on the Butler Bulldogs to win the national title. First off, let's define "insurance." According to the world's leading scholarly source, insurance is "a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss." By extension then, emotional insurance would be a way in which to insure your mental well-being in the case of a contingent, uncertain loss. Let's use Monday night as an example:

Going into the championship game, a Butler victory was paying +300. For those of you who aren't problem gamblers, what this means is that you would get three times your money by betting on Butler if they had won the game. So if you bet $10 on Butler to win, you would make $30.

Before the tournament started, I had thrown $20 into a bracket pool with four of my friends, winner take all. Due to my omnipotence, I had already clinched a victory here, netting me a cool $80 (for those of you unwilling to math, $20 from each of my friends). But what good was that $80 going to be if Duke got upset in the finals? Sure, it's some unemployment money, but the agony of constant Hoosiers references over the next year would more than cancel out the satisfaction I felt from winning the bracket.

Basically, in order to emotionally insure yourself, you have to look at it as how much you would be willing to pay to ensure that your team wins. Then you take that amount and bet it on the other team.

I called up my degenerate gambler friend, who has an online sports betting account, and had him place an $80 bet for me on Butler to win the game straight up. If Butler won, I would stand to gain $240. If you decide to look at it like I do, I was paying $80 for Duke to win. Therefore, the net gain in case of a loss would be $320.

With a Duke win, I'm happily at $0. With a Butler win, I'm pissed off, but my emotional insurance policy pays out $320. Monday morning, did I actually think Butler was going to win? No, but I wanted to stand to benefit, if only in a miniscule way, if they did. And if they lost, I would have no problem at all losing $80.

Was $320 enough to make me root against Duke? No way in hell. It's for this very reason that you only bet up to as much as you'd be willing to pay the magic sports genie to guarantee a victory. Had I robbed a bank and then placed several hundred thousand dollars on the game, I'm sure that during the game, I would have had conflicting emotions as to how I wanted it to play out. This insurance payout should really only come into play at the end of the game, when you're upset over the loss. Sure, the dark clouds are there, but at least there's a silver lining that's making it rain.

Last spring, I was in several tournament pools which I would win if UNC beat Michigan State in the NCAA Finals (due once again to my omnipotence, of course). Yes, a Duke grad picked UNC to win it all in 2009 -- I pick with my head, not my heart. If UNC won, I would stand to make several hundred dollars. Now as much as I hated Tyler Hansbrough and all things light blue, a large part of me wanted the cash, plus Duke wasn't really being directly affected in any way.

Unknowingly, I had over-insured a UNC victory, since I hadn't really anticipated winning any of my brackets. The $30 or so I'd paid to enter all of them would be paying out at about 20-1 with a UNC win. So what did I do? I simply watched something else on TV that night. If they lost, great -- Hansbrough choked. If they won, great -- I get paid. I just knew that I didn't want to be in a situation where I was rooting for UNC to win an NCAA Championship. NIT Championships, on the other hand....

I guess the game that really got the ball rolling on this theory for me was a Browns-Giants Monday Night Football game in October 2008. I was in Las Vegas with some friends, and decided that just in case the Giants (who were huge favorites) lost, I wanted to be able to soften the blow. I put $20 on the Browns. Several Eli Manning interceptions later, I was $80 richer. Was I devastated about the Giants losing a regular season game? Absolutely not. Disappointed, maybe. This was only a regular-season game, which is why I only emotionally insured myself for $20. But was I happy to get the money? Absolutely. I gauged how much I'd be willing to pay for a Giants victory on this night -- in this case, $20 -- and turned it into $80 when it didn't happen.

So what do Giants-Browns and Duke-Butler have in common? In both cases, I was rooting for the team that was favored by a lot, and made (or would have made) much more money than I ended up betting.

Therefore, emotional insurance works much better when your team is favored. Anyone betting on Duke would have gotten a much smaller payout -- that same $80 that would have won $240 with a Butler victory would only have paid about $25 for a Duke victory. So Georgetown fans could have eased the blow by betting on Villanova in 1985, Patriots fans could have made some serious cash betting on the Giants in Super Bowl XLII, and Russians who bet on the USA in 1980 would be rolling in rubles.

I know I've spouted off on this theory to many of you before, and that since I can't always remember my ranting and raving, there's a good chance I've forgotten a key point or two in here. If you see something missing, let me know.

I've enjoyed our current warm weather kick, but today's gonna be the last day over 70 degrees for a while. I'm going to go bask in the sun. Get outside if you can.