Coveting your neighbour’s house: understanding the positional nature of residential satisfaction

Abstract

Do the characteristics of our neighbour’s house affect how we view our own home? In this paper, I examine the importance of local comparisons in housing assessments by testing whether the size of one’s home relative to others in their neighbourhood influences their housing satisfaction. I use a unique feature of the 1993 American Housing Survey, in which the US Census Bureau randomly surveyed 988 housing units around the country and a cluster of approximately 10 of their nearest neighbours. I use these data to test whether a unit’s relative size in its neighbourhood influences the occupant’s housing satisfaction while controlling for a series of occupant and unit characteristics. I find evidence that relative position matters. Those living in comparatively small houses are more likely to express dissatisfaction with their home than people living in units that are large relative to other houses in their neighbourhood cluster.