The McMansion Effect: Top Size Inequality, House Satisfaction and Home Improvements in US Suburbs
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SeriesBrown Bag Seminars General Economics
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SpeakerClement Bellet (Erasmus University Rotterdam)
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FieldBehavioral Economics
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LocationErasmus University
Rotterdam -
Date and time
October 23, 2019
12:00 - 13:00
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.