The McMansion Effect: Top House Size and Positional Externalities in U.S. Suburbs
56 Pages Posted: 15 May 2019 Last revised: 13 May 2020
Date Written: April 25, 2019
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
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