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“Talk to any real estate agent, and they will tell you that you should buy the smallest house in an expensive neighborhood. That way, your home will retain its value. Buying the largest house in a less-expensive neighborhood means that your home value will get dragged down toward the median for the neighborhood.
But, it turns out that purchase won’t maximize your happiness. Research suggests that you are happier when you own the biggest house in a neighborhood of less valuable homes. This happens because of your tendency to make social comparisons. That is, you compare yourself to other people.
When you compare yourself to someone better off than you, that is called an upward social comparison, and it tends to make you unhappy (though it can sometimes be motivating to make you want to be more like them). When you compare yourself to someone worse off than you, that is a downward social comparison, and it tends to make you feel more satisfied with your lot in life. So, walking past a bunch of houses that are more expensive than yours can make you feel bad about where you live, which can then decrease your overall satisfaction with life.”
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