The McMansion Effect: Top House Size and Positional Externalities in U.S. Suburbs

Abstract

Combining multiple waves of survey data on house satisfaction with a geolocalized data set of three million suburban houses, this paper provides direct quasi-experimental evidence of positional externalities in the field. Homeowners exposed to the construction of very large houses in their suburban county are found to be less satisfied with their own houses, but not with their neighborhoods. This effect is conditional on the visual salience of the large houses—captured by their proximity to roads. Indirect evidence on home size improvements within households supports the direct evidence of reduced experienced utility.

Keywords: Positional Goods, Relative Income Hypothesis, Housing, Subjective Wellbeing, Inequality

JEL Classification: D12, Z13, I31