Publicación: What was fair in actuarial fairness?
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2019-06-06
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Atribución-NoComercial-SinDerivadas 4.0 Internacional
info:eu-repo/semantics/openAccess
info:eu-repo/semantics/openAccess
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In actuarial parlance, the price of an insurance policy is considered fair if customers bearing the same risks are charged the same price. The estimate of this fair amount hinges on the expected value obtained weighting the different claims by their probability. We claim that, historically, this concept of actuarial fairness originates in an Aristotelian principle of justice in exchange (equality in risk). We will examine how this principle was formalized in the 16th century and shaped in life insurance during the next two hundred years, in two different interpretations. The Domatian account of actuarial fairness relies on subjective uncertainty: an agreement on risk is fair if both parties are equally ignorant about the chances of an uncertain event. The objectivist version grounds any agreement on an objective risk estimate drawn from a mortality table. We will show how the objectivist approach collapsed in the market for life annuities during the 18th century, leaving open the question of why we still speak of actuarial fairness as if it were an objective expected value.
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Categorías UNESCO
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actuarial fairness, annuity, life insurance, mathematical expectation
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Facultad de Filosofía
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Lógica, Historia y Filosofía de la Ciencia