Running the numbers: Cryo vs Discount rate

The fol­low­ing is au­thored by Colby Davis. I am post­ing for him be­cause he doesn’t have an ac­count with any karma. Some­one re­cently re­quested num­bers on cryo preser­va­tion costs. I’ll note that my own opinion is that for young peo­ple un­likely to die in­vest­ing money in re­search is a bet­ter bet than in­vest­ing di­rectly in your own preser­va­tion.

Here is the link for the spread­sheet. Either down­load it or cre­ate a copy for your­self to edit.

Hey ra­tio­nal­ists, here’s the spread­sheet I pre­sented the other night. For those who weren’t there but are in­ter­ested, this is a tool I de­signed to break down the costs as­so­ci­ated with sign­ing up for cry­on­ics un­der differ­ent meth­ods of fi­nanc­ing it. Here are some in­struc­tions for us­ing it.

Column B is where the user puts all the in­puts: age, sex, prob­a­bil­ity you think that if you are frozen you will some­day be suc­cess­fully re­vived, and dis­count rate (for those un­fa­mil­iar with the term, this is like the re­verse of an in­ter­est rate, the rate at which cash flows be­come less valuable to you as they ex­tend fur­ther out into the fu­ture).

Column D is the prob­a­bil­ity that you will die in the next 20 years (the typ­i­cal term for a term life in­surance policy). It is calcu­lated based on the “life table” sheet, which i stole from a gov­ern­ment ac­tu­ar­ial table on­line.

Column E is your cur­rent life ex­pec­tancy, the num­ber of ad­di­tional years you have a roughly 50% chance of sur­viv­ing through.

Column F is how much the monthly fee for a 20 year, $100,000 life in­surance policy would cost you, as­sum­ing “ex­cep­tional” health, as de­ter­mined by the top re­sult at http://​​www.term4sale.com/​​

Column G is the pre­sent value of that policy, us­ing your dis­count rate. This means that you should be in­differ­ent be­tween pay­ing this amount right now and pay­ing the figure in column F ev­ery month for the next 20 years.

Column H is the prob­a­bil­ity that you will die within the next 20 years AND some­time there­after be suc­cess­fully re­vived from cryo­genic sus­pen­sion, mak­ing the heroic as­sump­tion that your prob­a­bil­ity be­lief in column B is true.

Column I is sim­ply the dol­lar pre­sent value amount spent per 1 per­centage point re­duc­tion in (per­ma­nent) death. This is the value you want to con­sider most when de­cid­ing whether to sign up or not.

The next columns con­sider the al­ter­na­tive means of pay­ing for a cry­on­ics policy, sav­ing up and in­vest­ing in the stock mar­ket un­til you have enough money to pay for it out­right.

Column K gives the fu­ture value af­ter 20 years of in­vest­ing the amount you would have spent on an in­surance policy in the stock mar­ket in­stead, as well as the pre­sent value of that figure to you now, dis­counted back at the rate you gave. (This is not nec­es­sar­ily per­ti­nent to the cry­on­ics de­ci­sion but is pro­vided for com­par­i­son)

Column L is the amount you would have to in­vest monthly to have an ex­pected fu­ture value of $100,000 by the end of your life ex­pec­tancy.

Column M is the pre­sent value of fore­go­ing that monthly amount for the rest of your life ex­pec­tancy.

Column N is the prob­a­bil­ity you will die af­ter you life ex­pec­tancy (50%) AND be suc­cess­fully re­vived as­sum­ing yours p-value.

And fi­nally column O is the same mea­sure as in Column I, us­ing this al­ter­na­tive plan. A lower value in one column or the other (most of you will find column O to be the lesser value) means that you can re­duce your prob­a­bil­ity of per­ma­nent death cheaper (or, re­duce your prob­a­bil­ity of death by a greater amount for the same dol­lar amount) by pur­su­ing the cheaper strat­egy.

Hope you en­joy!

- Colby


P.S.

There was a dis­cus­sion at the meet­ing about whether the figure in column N was too high be­cause it failed to ac­count for the prob­a­bil­ity that poor stock mar­ket perfor­mance may leave you with­out enough money to af­ford the cost of cry­on­ics. I be­lieve this is false be­cause since long-run stock re­turns dis­tri­bu­tions and life ex­pec­tan­cies are ap­prox­i­mately nor­mally dis­tributed and in­de­pen­dent of one an­other, the chance that you will die late with a poor re­turn (thus un­able to freeze your head) is al­most perfectly offset by the chance that you will die early with a great re­turn (thus still able to freeze your head). So it’s not that the mean is too high, but merely that there is a var­i­ance around it. I was try­ing to figure out how to work this into the spread­sheet but figured the un­cer­tainty of our be­liefs about cry­on­ics was much more a con­found­ing fac­tor here than the prob­a­bil­ity dis­tri­bu­tion of pos­si­ble stock-re­turns-time-paths.