Would you sell life equity?

I had the same discussion with a good friend a while back. We were thinking of starting an entire new market where people can sell some shares in themselves and then those shares can be traded. Some issues that we though about (I'll add more as I remember them):<p>- As author mentions, once you get paid you have less incentive to work.<p>- In order to make an investment, you would need access to confidential information - risk of diseases, test scores, etc. Not sure the ethical/privacy implications of this.<p>- The type of people willing to sell may likely be the people who don't have faith in themselves - why would you want to support that?

This is exactly the business model which most private US universities work with, except with the minor difference that people are not required to give money back to their alma mater. As high as the cost of tuition fees may be, it's much less than what it costs universities to provide that education; the difference is made up by the fact that over their lives, many Americans donate significant fractions of their income to the institutions which educated them. (A more macabre version of this calculation is done at universities which provide free education to seniors because experience tells them that this is a good way to be written into someone's will.)<p>And of course we shouldn't forget governments: By providing free primary and secondary education, and (in most developed countries) free health care, governments provide per-capita funding on the order of hundreds of thousands of dollars -- and then call their annual dividends on equity "taxes".

Warren Buffet mentioned something similar... If you were to invest in the future success or bet on the failure of someone, what traits do they have?<p>You probably wouldn't pick the smartest or dumbest and the traits are probably habits. You can learn good habits and unlearn bad ones.

The problem seems to be that life is a long time and most people who invest want to see returns in a short time. I guess banks could do it, but it seems unlikely that they would be the one to start.<p>I once met someone who claimed to be an entrepreneur and said they would be a mentor to promising entrepreneurs for a promise of equity in everything that entrepreneur did for his life. It sounded a bit ridiculous to me at the time, and it sounds even more ridiculous now that I know more about investing.

When someone invests in something there is an implicit assumption on both sides:<p>As a buyer/investor, I assume that your present value is greater than your price. This is what happens when people buy undervalued stocks. In better cases, I assume that your value after investment is greater than your present value by more than the amount of the investment. That is, by investing in you, I add more value than the amount of the investment. This is what Y Combinator does.<p>As a seller, you make the inverse assumption. Either you have lost faith in the value of what you sell, or you believe that with the investment, you'll be able to make more than you would otherwise.<p>In the case of life equity, the first case is tough to see. If you believed in your life equity's enough to sell it, you wouldn't sell it. So, you must be seeking the second case: If only I had more money now, I could make more money later, greater than the percentage of the funds I need to give back to my investor. From this we can assume that a potential investor would want a justification of how you will earn that money. We're effectively reduced to the same venture funding and loan structures that already exist today.<p>The only other way life equity would work would be as a scam: If life equity investors took advantage of bad-at-math or desperate sellers. This is actually the same as third-world loan sharks, only we're calling it an investment instead of a loan.

There was a commercial that had something to do with insurance or something, where families were traded like stocks on an exchange.<p>There have been numerous occasions where I've thought about making something like this. How do you determine the value of a person or family? Would people be open to exposing so much details about their lives in order to increase the "value" of their family/person (like a public company has to open their books)?

US Fedgov Corp. already has a claim on 10-35% of my life income! I didn't even sign any contracts.

Someone offered to do this for me a couple years ago. There was an ethical conflict of interest though so I never actually considered it seriously. I don't remember what the actual proposal was, but I think it involved an apartment in Boston with a running tab for a couple years in exchange for some percentage of whatever I made for the next five or so years.

This reminds me of the woman in France who, in her eighties, sold her house to a man in his fifties. He had to pay her every month until she died and then he would get the house.<p>She lived to be 122. He paid for the house 4 times and then died first.

I'd sell it if I had an option to buy it back.<p>All of the unresolved questions you have also apply to equity in corporations. Except that corporations live forever, rather than for seventy years, so the uncertainty is compounded.<p>I don't understand the 'corrupt' argument. Do you worry about this with regard to stocks, too? Does owning AMZN make you 'corrupt' when you ignore Barnes &#38; Noble?

I swear you guys read my email. Please stop.<p>Apr 11 (11 days ago)<p>for what amount would you sell 1% of your future income? i should set up a stock market for individuals.... lets say how much would you sell 1% of your next 10 years income<p>Response:<p>Haha that would be interesting.<p>Of course if someone sells more than 90% of their income, then they probably won't earn anything :)

Sure I'll take a million right now, you can have 5%... if invested wisely the interest on that is enough for me to live on...

You know, this already existed for 6 years.<p><a href="http://en.wikipedia.org/wiki/MyRichUncle" rel="nofollow">http://en.wikipedia.org/wiki/MyRichUncle</a><p>They had to change their business model because they became way too popular.

How is this an advantage over loans, bonds, scholarships, patrons, angel investors and all the other investment options people have? Most people don't want to get a perpetuity as a loan when there are much better options out there!

I would personally take a minimum to not worry ($1mm) and give out up to 10-15% ... guess I'm a sell out.

I'd have a hard time selling my life equity without thinking: "k, I'm officially someone's bitch."

I've heard that some college fraternities do this, but it may have been just a rumor.

Is there shorting? Can I short sell?

sure, I doubt i'd disclose how early i'm planning on retiring though.