Reply to How would this controlled choice nonsense actually work on Capitol Hill?

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[quote=Anonymous][quote=Anonymous]Actually house value should be related to how many years you expect to benefit from free education less the probability that you will have to pay for private times the cost of private times the number of years you would have to pay for private. It would be a similar calculation to how you should estimate the value of a rental unit. Perhaps the "you are not financially literate" poster actually means that the probability of having to pay for private in DC is so close to 100 percent that home buyers should not even be doing this calculation?[/quote]

No, I accounted for what economists call "information asymmetry" (compounded here by another notorious problem called "uncertainty" and yet another one called "conspicuous consumption"). Home buying is fraught with information asymmetry because it's a good you purchase rarely (once a decade maybe) and about which the average (even if educated) consumer has very little true insight. If that average consumer does nothing but rely on real estate agents (who incidentally have an interest in increasing home prices) and diffuse signals, you end up with people vastly overpaying what the home (accounted for those asymmetries and uncertainties) is truly worth. That many new urban dwellers arrive from places around the country that don't happen to offer a vast network of open boundary charter schools (decreasing said uncertainty re IB school) makes those financial literacy problems worse, certainly when it comes to judging the true value of buying in-bounds for any particular school. (But, hey, I'm not complaining about the windfall!)[/quote]

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