He's not buying a house in the London market, he's buying a house from the collection of houses his wife wants in the current time frame.

The alternate investment is in a good divorce lawyer which could be more than the price difference of the house before and after the bubble bursts.

You make an excellent point. This is (and many house purchases are) less about making a "good investment" and more about an attempt to purchase dreams. Dreams of what the family could be like, dreams of how this will make the kids or spouse happier, etc.

This is where Hartford invariable goes off the tracks with his "rationality" - he seems blind to the actual underlying irrational reasons. I know he argues that we humans are actually rational actors in an irrational world. I think the evidence is stronger for the obverse - that we are largely irrational actors in a fairly rational world - just a world who's model is beyond the scope of what we can fully conceive of.

For a long time I resisted the view of our "stunt kid" that people do what is easiest. Because I felt that didn't explain all manner of behaviours that I knew were true and not uncommon. But then it came to me that there was a boundary condition here - that of "mindful awareness".

So now I believe that "people do what is easiest within the scope of what they can forsee". So an 18 something year old, with a partially formed Orbito-Frontal Cortex and an incomplete HS education, is going to have a much narrower and closer in scope of vision as to the consequences of his actions, their ultimate cost and hence "what is easiest" - espeically compared to someone with a post Bachalaureat education, world travelled and 15 years adult life experience under their belts.

Some also naturally have broader vision than others. And so it is the scope of vision that drives our decisions. And that scope is inherently an irrational boundary.

In Hartford's case, he thinks he has some visibility into the pricing of London property, but he really doesn't. So he is instead relying on his estimate of "ease" based on his familial relationships. And the way he is making this about his wife, I suspect that if the bubble bursts on them, their marriage might as well.

*yup*

He's referenced himself as 'rational' . He's implying that his wife is not. At least in this instance - the house. Let's hope that it's only in this instance, and not overall.

When one person in a marriage acts rationally, and the other does not, over the long term, things go bad. When one person thinks much 'longer view' than the other, it spells divorce.

Been there, done that.

It's unfortunate that I see more and more people who live a 'instant gratification' type of life, and who don't plan long term. Who even actually fight/argue to not plan long term. Living paycheck to paycheck, no matter how much they make, expecting a windfall to drop in their lap for no work, no effort.

It's sad really.

Back to the point, he should really discuss the rationality/irrationality of this move with his wife and family. It's obviously annoying him a bit that he feels he has to give in to what he considers an irrational idea. That annoyance can grow. I know. :) I mean... if she doesn't get every thing she wants, irrational or not, she'll leave? If that's the basis for this marriage, it isn't one. The communication of equals has broken down.