The McMansion Effect: Top Size Inequality, House Satisfaction and Home Improvement in U.S. Suburbs
62 Pages Posted: 15 May 2019
Date Written: April 25, 2019
Despite a major upscaling of single-family houses since 1980, house satisfaction has remained steady in American suburbs. This Easterlin paradox in the realm of housing can be explained by upward-looking comparisons in the size of neighboring houses. Combining data from the American Housing Surveys with a geolocalised dataset 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. Upward-looking comparisons are stronger among people living in larger houses and decrease with the distance from McMansions. I provide further evidence that homeowners exposed to the construction of big houses in their neighborhood put lower prices on their home, are more likely to upscale to a bigger house and take up more debt.
Keywords: Housing, Positional Externality, Subjective Wellbeing, Inequality
JEL Classification: D12, Z13, I31
Suggested Citation: Suggested Citation