What are rights: Some reflections from the option theory

We often demand more rights. More rights equal to better society. Right?

In finance, there is an instrument called option. Its payoff is always nonnegative. So option is a right. Isn’t that great to have an option? But you have to pay for that option. Although the payoff of an option is always nonnegative, its profit/loss can go both ways. Indeed, option buyers make a loss most of the time.

Are we better off if we have more rights? There are two types of options: call and put. With a call, one benefits from the rise of the market. With a put, one benefits from the drop of the market. If one has both call and put, one has more rights. But you have to pay more. You end up less likely to make a positive return. On average, more rights you have, less likely you will end up ahead. Since rights are expensive, only wealthy societies can provide more rights.

Who will benefit more from rights! More volatile one is, more valuable the right becomes. For example, if someone often engages in drunk driving, then free medical coverage, a right, becomes more valuable.  Medical expenses come from tax revenues.  So law abiding citizens subsidize criminals.

Of course there are many benefits with more rights. This has been explored in many articles. I won't repeat them here.