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

56 Pages Posted: 15 May 2019 Last revised: 13 May 2020

See all articles by Clement Bellet

Clement Bellet

Erasmus University Rotterdam (EUR)

Date Written: April 25, 2019

Abstract

This paper provides direct field-level evidence of positional externalities in the size of neighboring houses. Combining data from the American Housing Survey with a geolocalized data set of three million suburban houses, I find that new constructions at the top of the house size distribution lower the satisfaction that neighbors derive from their own house size. Positional externalities are stronger among people living in larger houses and decrease with the distance from so-called McMansions. I provide further evidence that homeowners exposed to the construction of large houses in their suburb put a lower price on their home, are more likely to upscale to a larger house, and take up more debt.

Keywords: Housing, Positional Externality, Relative Consumption Hypothesis, Subjective Well-Being, Inequality

JEL Classification: D12, Z13, I31

Suggested Citation

Bellet, Clement, The McMansion Effect: Top House Size and Positional Externalities in U.S. Suburbs (April 25, 2019). Available at SSRN: https://ssrn.com/abstract=3378131 or http://dx.doi.org/10.2139/ssrn.3378131

Clement Bellet (Contact Author)

Erasmus University Rotterdam (EUR) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

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