§ 24. It may perhaps be supposed that such an example as this is a reductio ad absurdum of the principle upon which Life and other Insurances are founded. But a moment's consideration will show that this is quite a mistake, and that the principle of insurance is just as applicable to examples of this kind as to any other. An office need find no difficulty in the case supposed. They might (for a reason to be mentioned presently, they probably would not) insure the individual without inconsistency at a rate determined by either average. They might say to him, “You are an Englishman. Out of the multitude of English who come to us nine in ten die if they go to Madeira. We will insure
you at a rate assigned by these statistics, knowing that in the long run all will come right so far as we are concerned. You are also consumptive, it is true, and we do not know what proportion of the English are consumptive, nor what proportion of English consumptives die in Madeira. But this does not really matter for our purpose. The formula, nine in ten die, is in reality calculated by taking into account these unknown proportions; for, though we do not know them in themselves, statistics tell us all that we care to know about their results. In other words, whatever unknown elements may exist, must, in regard to all the effects which they can produce, have been already taken into account, so that our ignorance about them cannot in the least degree invalidate such conclusions as we are able to draw. And this is sufficient for our purpose.” But precisely the same language might be held to him if he presented himself as a consumptive man; that is to say, the office could safely carry on its proceedings upon either alternative.
This would, of course, be a very imperfect state for the matter to be left in. The only rational plan would be to isolate the case of consumptive Englishmen, so as to make a separate calculation for their circumstances. This calculation would then at once supersede all other tables so far as they were concerned; for though, in the end, it could not arrogate to itself any superiority over the others, it would in