The flaw in this thought experiment is assuming that neighbors are the peer group.
Instead people want to feel superior to their friends/coworkers/social circle. Few people socialize with their neighbors anymore... especially if their is a huge income/class difference. You spend more time hanging around coworkers and family who are more l…
The flaw in this thought experiment is assuming that neighbors are the peer group.
Instead people want to feel superior to their friends/coworkers/social circle. Few people socialize with their neighbors anymore... especially if their is a huge income/class difference. You spend more time hanging around coworkers and family who are more likely to be on your same income bracket regardless of where your house is.
Therefore buying a cheaper house in a better neighborhood is actually the superior move, because then you can status signal your zip code/neighborhood.
i.e. two engineers who work together... one lives in little house in Rich Area, one lives in big house in Poor Area. All peers will assume that one who lives in Poor Area is bad with money, and one who lives in Rich Area is more successful.
You also have to add in the cofounding factors of beauty, safety, schools (with is a proxy for status), etc...
The flaw in this thought experiment is assuming that neighbors are the peer group.
Instead people want to feel superior to their friends/coworkers/social circle. Few people socialize with their neighbors anymore... especially if their is a huge income/class difference. You spend more time hanging around coworkers and family who are more likely to be on your same income bracket regardless of where your house is.
Therefore buying a cheaper house in a better neighborhood is actually the superior move, because then you can status signal your zip code/neighborhood.
i.e. two engineers who work together... one lives in little house in Rich Area, one lives in big house in Poor Area. All peers will assume that one who lives in Poor Area is bad with money, and one who lives in Rich Area is more successful.
You also have to add in the cofounding factors of beauty, safety, schools (with is a proxy for status), etc...
So the jury is still out.