Prices of Eight

How much is 8 worth? Quite a few thousand Yuan, according to new research into Chinese vehicle licence plates. Travis Ka Ho Ng, assistant Professor Department of Economics at the Chinese University of Hong Kong has completed his latest academic project looking into ‘The Value of Superstitions’. And the results of his investigations – performed with colleagues professor Terence Chong and Xin Du – are published in this month’s issue of the Journal of Economic Psychology, Volume 31, Issue 3.
To begin the paper, professor Ng draws attention to the words of Stevland Hardaway Morris (formerly Judkins) –

“When you believe in things that you don’t understand,
Then you suffer,
Superstition ain’t the way.”

[Stevie Wonder, ‘Superstition’, 1972]

Sentiments that could be seen as broadly in line with official Chinese Govt. policy – which discourages superstitious behaviour. “The scientific spirit should be encouraged throughout society by spreading the use of scientific methods, introducing scientific knowledge to the public and combating ignorance and superstition.” (source: Report on the Work of the Government (2000))
As an empirical test-bed on which to quantify the effect, Ng and colleagues chose to look at the auctions of ‘lucky-number’ vehicle license plates. By correlating data obtained at 292 different number-plate auctions in Hong Kong (1997 – 2009) with other factors such as the Hang Seng Index, the plates’ transferability, and the prevailing economic inflation, the team has been able to estimate the following equation for 3-digit ordinary plates.

(see paper below for explanation of the terms)

Not only were substantial lucky-number premiums identified, but it was also discovered that the effect which they have changes over time, according to the economic climate. For example, in the case of swapping a number 4 for lucky-number 8

“…such a number replacement adds 134.8% to the price of ordinary 3-digit plates before 2006 but only 97.4% after 2006.”

(Note: The Mandarin word for ‘eight’ sounds similar to the word for ‘wealth’)

The researchers point out that the cost implications of superstitious behaviours has been studied before – findings include, for example, that Chinese apartments with 8 in the address sell for higher prices during property booms, and that in the US “… businesses lose between $800 and $900 million every Friday the 13th.” But, according to the authors –

“…we are the first in the economics literature to address the question of how such value changes over time, and in response to other policy changes.”

The research can be read in full here