Thursday, 3 October 2013

The Value of Faith (an Empirical Approach)

This post builds on the ground breaking research of Greg Kyte, the funniest CPA in the business and a noted agnostic.  Greg publishes a blog at cpaagnostic.blogspot.com.  In one post, he evaluates Pascal's wager, which is the assertion that one should believe in God, because if he doesn't exist, you have suffered no harm.  However, if he exists and you don't believe, you get everlasting accommodations in hell.

Having studied Pascal's wager in depth, I find that it has never been subjected to rigorous academic scrutiny.  I propose a model for valuing faith, for which Pascal's wager represents only two extreme cases.  A real mathematical model of faith in God yields substantially richer results than Pascal's believe or else model.

In creating my faith model, I asked the question I always ask when performing a business valuation.  "What would Shannon Pratt do?"  If you're in the business valuation biz, you're laughing your ass off now.  If you're not, Shannon Pratt is Jesus Christ, Mohammed, and Jennifer Aniston all rolled up into one for business valuators.  You can't discount his advice (another marvelous biz valuation pun).

In creating my faith model, I started with the basic rule that anything, including faith, is worth the net present value of its benefits.  That yields the following equation:

F = NPV((P * H) - S - T)  The variables in his equation are as follows:
F is the value of faith in God.
P is the probability that God exists.
H is the value of heaven's benefits.
S is the value of unforgiven sin.
T represents the transactional costs of religion.

Thus, this formula states that faith is worth the present value of its benefits less related costs, in other words what you give up to get to heaven.   Let's examine each variable in detail starting with the easiest, transaction costs.

Transaction costs are the costs of maintaining faith.  Tithes and offerings are an obvious cost.  Less obvious, unless you're Catholic, is the potential cost of having family members molested by religious authorities.  If you're a member of a cult, don't forget the costs of the Kool Aid.  If your religion requires human sacrifices, count the costs of finding your victims, I mean sacred offerings.

Representing the value of unforgiven sin, S consists of the benefits, net of related costs, of indulging in behavior at odds with at least one of the Ten Commandments.  This is where you record the benefits of banging the babysitter.  Please remember to subtract from the value of the orgasms: incarceration time, alimony, legal costs and possibly child support if you don't wear a condom.

Here's some personal advice based on mathematics.  If the costs of the sin exceed the benefits, you might want to avoid the sin.  In other words, if you can't do the time, don't bag the babysitter.  Woo a TGIF waitress instead.

You might reasonably ask why only unforgiven sin is a subtraction in calculating the value of faith and not forgiven sin.  Forgiven sin does not reduce the benefits of heaven, at least not in this model.  Further research on this point may be necessary. For instance, Hitler and Mussolini are rumored to have asked for forgiveness on their deathbeds.  If they received a heavenly reward, hell may well be empty.  Apparently, the materiality of a sin does not reduce its capacity to be forgiven.  In any case, the obvious strategy is to sin like hell until just before you die.  Then repent and avoid the subtraction in this model of faith.  Disclosure - please consult your own competent religious authority for advice pertinent to your particular situation.

Let's tackle P next, the probability that God exists.  P would seem to have only two values, but Pascal erred when he assumed that either you believe in God or you don't.  He implicitly assumed P was either zero or 100%.  This is not necessarily the case.

For instance, what about Sunday Christians?  Their value for P equals 1 divided by 7 or roughly 14%.  For those, who attend church only at Christmas and Easter, P equals 2 divided by 365.  We can safely ignore leap years as an immaterial variance, except in the year of death, when you really don't want to take chances.

Further, what about worshippers of Satan?  Their values for P may actually be negative.  Clearly their P values must not be zero, since a belief on Satan would seem to imply a belief in God also.  I'll leave this last point for those seeking an interesting thesis for their doctoral degrees.

Finally consider H, the value of heaven's everlasting benefits.  You might think the value of heaven is infinite, but that is only a cursory consideration.  Consider that the definition of fair market value is the value at which a property would change hands between a willing buyer and a willing seller.

First, who in the hell would sell heaven willingly?  I searched both the BIZCOMPS and Mid Market Comps databases looking for comparable sales in vain.  Finding no comparable sales of heaven, we must conclude that heaven is a non-marketable minority interest requiring substantial discounts for both minority interest and marketability. Those discounts could total 100% and wipe out the fair market value of heaven entirely.

In conclusion, Pascal was a poor gambler.  He'd lose his ass in Vegas with his wager.  Much more federally funded research into the empirical model of faith is required.  As a small first step, I filed a Freedom of Information Act with the NSA requesting all of their metadata on God.  We need to know just whom God talks to on his / her cell phone.  What televangelists does he / she have in his / her contact list?  What are his / her favorite porn sites?  Maybe he / she hasn't spoken to the Pope in centuries after that Reformation thing.

Once Congress finishes screwing up the federal debt ceiling, I'll ask them for a $5 billion grant to further my research.  Please take your Congressman hostage until he supports my grant.

Thanks for reading!  For real tax and accounting advice, please visit the main S&K web site at www.skcpas.com.

Until next time, let's do it to them before they do it to us.

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