A recent study shows that the increasing size of houses in the U.S. has done nothing to improve homeowner satisfaction.
The study was done by economist Clement Bellet who claims that the plateau in homeowner satisfaction may be attributed to what he calls the “McMansion effect.”
I find that new constructions at the top of the house size distribution lower 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.
These “upward-looking comparisons” cause many people to place a lower value on their house or to upscale to a larger home taking on more debt.
According to Bellet, “house size is arguably the most salient characteristic of status in American suburbs” and for many “what matters for life satisfaction may not be relative income but relative visible consumption.”
The study suggests that there is
a trade-off between the decision to live in a neighborhood with better amenities and the social inclusion costs implied by status competition. It also suggests the benefits of moving to more expensive locations may be overestimated by homeowners who do not anticipate the status loss experienced by the construction of increasingly bigger houses.
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