Hedging bets

Over at the Atlantic, Megan McArdle writes:

And even if I thought those numbers were about right, it might make sense as a way to hedge my net psychic wealth. If Scott Brown wins, I’m happy–and if Martha Coakley wins, at least I get $50 or so to drown my sorrows.

I’m a great believer in hedging emotional risks. Betting against an outcome you really want is an excellent way to manage downside disappointment.

I used to think this way, up until the point where I had a friend place a wager against the Packers when they were in the NFC championship game against the Giants a few years back. The Giants were huge dogs…the line was something like -220 +220, if I remember correctly (meaning that if you beat $100 on the Giants to win — not to beat the spread, just to win — you’d collect $220). I glibly thought “Hm, well, how about I bet $50 on the Giants so either way I’m happy: Either my team is in the Super Bowl or I score a quick $110.”

The $110 didn’t make me feel any better. Lessons learned…