A weblog by Will Fitzgerald

“Watch the money”

Seth Godin argues in his post Watch the money that one can tell a good life insurance salesperson by how much insurance they bought a lot of their own insurance; and you can tell a good non-profit person by how much they give to charity. Both of these statements seem right on the face of things, but are, I believe, false.

First, I think Mr Godin is (perhaps) confusing moral good and monetary achievement. If insurance salespeople are morally good, they will not encourage others, or themselves, to buy more insurance than they need. So, a young salesman with no wife or children or other financial dependents shouldn’t buy much insurance–or any insurance at all. Or a saleswoman whose husband gets a great deal on insurance via work might not need to buy any for themselves. As far as “monetary achievement” goes, I don’t have a strong opinion–I suspect, though, that life insurance is one of those things one can sell without believing in it, and one can succeed financially if not morally.

People who work in non-profits, on the other hand, will have their own reasons for not giving as much to non-profits as those who give in for-profit organizations. First, they are typically paying a very high opportunity cost to work in a non-profit; it’s easy to imagine that one could make two or three or even more times the annual salary in a for-profit position than a non-profit; in these cases, one immediately gives 50% or more to charity by working on the cheap. Second, of course, is that you have to think about whether your talking about actual amounts or percentages. Also, one should remember that giving a percentage of a large amount of money is less risky than giving away the same percentage of a smaller amount of money; so the poorer non-profit worker giving 10% is also giving up more security than a richer for-profit worker (Bill Gates can give away 99% of his wealth, and still be very wealthy indeed; there’s very, very little risk for him of bottoming out).

So, yes, the life insurance salesperson should  buy life insurance, and the non-profit worker should give to charity, but their doing so is more complicated than Mr Godin suggests.


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