The McMansion Effect: Top Size Inequality, House Satisfaction and Home Improvement in U.S. Suburbs

62 Pages Posted: 15 May 2019

See all articles by Clement Bellet

Clement Bellet

INSEAD; London School of Economics & Political Science (LSE) - London School of Economics

Date Written: April 25, 2019

Abstract

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

Bellet, Clement, The McMansion Effect: Top Size Inequality, House Satisfaction and Home Improvement 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)

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

London School of Economics & Political Science (LSE) - London School of Economics ( email )

United Kingdom

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