Estimating the superstition value: why not decomposition analysis?

Hock-Eam Lim, Woei-Chyuan Wong and Nur Adiana Hiau Abdullah

Journal of the Asia Pacific Economy, 2023, vol. 28, issue 2, 374-389

Abstract: Superstitious belief of the number of eight as a lucky number is common among the Malaysian Chinese as its pronunciation carries the meaning of “prosperity”. Nevertheless, for the non-Chinese (i.e. Malay) who do not believe in superstition, it is just a neutral number. The existence of the two groups provides a natural setting to use the nonlinear decomposition analysis. This innovative approach allows us to decompose the price premium of number 8 obtained from the hedonic regression model into superstition and non-superstition components. The nonlinear decomposition analysis shows that approximately 37% to 45% of the estimated premium value which are associated with number 8 is attributed to superstition. This implies that the estimation of previous studies on superstitious value of number eight by using the hedonic regression model is subjected to an upward bias.

Date: 2023
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DOI: 10.1080/13547860.2021.1928406

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