Revealed preference for relative status: Evidence from the housing market

► Surveys suggest the size of house relative to neighbors matters most to people. ► Test relative versus absolute size with Bayesian spatial Durbin hedonic model. ► Data set includes 20,000 fair market housing transactions from Ohio in 2000. ► Relative house size matters in findings, but preference for absolute size dominates. ► Implies that an area-wide increase in housing size would increase social welfare.