Status urges and real estate

by Charles Montgomery on

They say it is still a great time to invest in real estate in the USA’s foreclosure-riddled suburbs. Your gut–and decades of conditioning–might be urging you to trade up to a super-sized and marked-down mansion. Economists Luis Rayo and Gary Becker explain the folly of this approach in this lovely equation:

And I explain just what they are talking about, and why the big-house urge might doom us to dissatisfaction in my Walrus story, Me Want More Square Footage. The problem: evolutionary history. Our genes, says Rayo, don’t actually want us to be happy.