[notahacker]

There's nothing magical about the pooling of risk and reward being administered by an entity which is an insurance agent that makes the payoff matrix look different in this model. Yes, this includes the fact that sometimes the syndicate returns a little more to its members than was put in and sometimes a little less depending on who flipped which coin toss.

All of which is moot to my original point which was that the OP's original argument that the mainstream economics profession is focused purely on expected value with no concept of risk is laughably wrong.

They're in fact a few steps ahead of him, because they also assess pooling of earnings in terms of moral hazard and adverse selection, instead of naively assuming that expected return and downside risks are evenly distributed across the population and invariant with respect to wealth pooling. Adverse selection is the actual reason private insurers are unlikely to take on the burden of insuring things like unemployment (people that find it easy to find employment and have lots of savings will rationally avoid participating unless its compulsory, which means more people wanting to claim on it than pay in), but of course introducing variation in likelihood of payoffs to the model leads to potentially very different outcomes...