The U.S. Census Bureau has been asking Americans about satisfaction with their homes since 1984. When researcher Clément Bellet looked at the data, he found that even as home sizes grew, the level of satisfaction stayed relatively constant, even though individuals had more private space by the aughts than in the 1980s.
Bellet found that prestige may be driving our desire for bigger homes, because house satisfaction was highly dependent on the size of other houses in the neighborhood. If people saw newer, larger homes being built nearby, their satisfaction with their own home fell. These same homeowners were also more likely to upgrade their home and take on debt to keep up with the Joneses.
That’s why economists describe houses as “positional goods.” The more one person benefits from a positional good, the more others are harmed.
“They determine our social status by effectively exhibiting our wealth and tastes,” writes housing researcher Chris Foye. “Even if a person’s living space is large enough to meet their basic needs, they may still feel a stigma (or pride) if it is smaller (or larger) than that of their neighbors, friends, or family.”
The dots show where the family spent most of their time. (Wall Street Journal)
The UCLA researchers found many of the families were using the extra space to store stuff. Compared to any other society in global history, they said, contemporary Americans have the most possessions per household. It’s ironic that technology has reduced the need for stuff — think of all the things a single smartphone can do — yet Americans are still accumulating more and more.
The bigger the home, the greater likelihood for wasted space, which, in the end, is wasted money.
When asked what people waste their money on, the first thing that Nobel Prize winning economist Robert Shiller named was bigger homes.