Superstition in the Housing Market

Abstract

We provide the first solid evidence that Chinese superstitious beliefs can have significant effects on house prices in a North American market with a large immigrant population. Using real estate data on close to 117,000 house sales, we find that houses with address number ending in “4” are sold at a 2.2% discount and those ending in “8” are sold at a 2.5% premium in comparison to houses with other addresses. These price effects are found either in neighborhoods with a higher than average percentage of Chinese residents, consistent with cultural preferences, or in repeated transactions, consistent with speculative behavior. (JEL D03, R2, Z1)

The Effects of Superstition on Choice and Latency

“…For example, in the Chinese culture, “4” is a negative number because it sounds like “death,” while “8” is an auspicious number because it sounds like “prosperous.” Therefore, a superstition involving “4” is a negative superstition, while one involving “8” is positive. Research shows that belief in lucky numbers has resulted in Chinese consumers paying a premium for houses bearing lucky number “8” and a discount for unlucky number “4” (Fortin, Hill, & Huang, ; Ng, Chong, & Du, ), while products with price tags with lucky numbers sold more than those with unlucky price tags (Fortin, Hill, & Huang, , Yang, ). A pretest among 30 participants showed that among numbers 1–10, “4” was rated the least lucky ( x = 1.80) while “8” was the luckiest ( x = 7.63).…”

“…Superstitious beliefs and behaviors are characterized by the incorrect establishment of cause and effect, resulting in sometimes irrational behavior (Foster & Kokko, ). Indeed, superstitions have been shown to be employed by individuals under varied settings—playing sports (Burger & Lynn, ), gambling (Joukhador, Blaszczynski, & MacCallum, ), buying less familiar products, and even facing complex choices such as buying a house or stocks (Fortin, Hill, & Huang, ; Hirshleifer, Jian, & Zhang, ; Lepori, ).…”

Intrinsic Religiosity and Attitude toward Finales as Precursors of Superstitious Beliefs: A Cross-Cultural Investigation

“…Consumers with a phone number containing more '8s' are more likely to purchase a condo on a floor ending in '8' (Shum, Sun and Ye, 2014). Chinese residents in Auckland, Singapore, and Vancouver pay a premium price for houses with an address ending in a lucky number (especially '8') and a discounted price if ending in '4' (Agarwal et al, 2014;Bourassa and Peng, 1999;Fortin, Hill and Huang, 2013;Ho, 2008). In Hong Kong, government-auctioned motor vehicle license plates with an '8' sell at a premium and a '4' sell at a discount (Chong and Du, 2008;Ng, Chong and Du, 2010).…”

“…From a consumer perspective, researchers have explored superstitious beliefs within (1) single product contexts such as sports, investments, residences, and vanity license plates (Agarwal et al, 2014;Ariyabuddhiphongs and Chanchalermporn, 2007;Fortin, Hill and Huang, 2013;Kolb and Rodriguez, 1987;Lepori, 2009;Morris and Griffiths, 2013;Wilson et al, 2013;Woo and Kwok, 1994), (2) single luck contexts such as birth year, product usage, numerology, and feng shui (Chau, Ma and Ho, 2001;Hamerman and Johar, 2013;Johnson and Nye, 2011;Peng, Hsiung and Chen, 2012), (3) single marketing variables such as brand logos and selling price (Simmons and Schindler, 2003;Wang et al, 2012;Yang, 2011), and (4) single cultures or countries (e.g., South Africa, China) (Bourassa and Peng, 1999;Peltzer and Renner, 2003).These researchers repeatedly analyzed self-reported attitudinal and profile data (Hernandez et al, 2008;Zeidner and Beit-Hallahmi, 1988) and used econometrics to model government-collected data (Chong and Du, 2008;Ng, Chong and Du, 2010;Woo et al, 2008). Yet, calls for cross-cultural attitude-based research on consumers' superstitious beliefs continue (Block and Kramer, 2009;Wang, Oppewal and Thomas, 2014).…”

Number Preferences in Lotteries

“…Vehicle license plates with the lucky number eight are auctioned at relatively high prices, and vehicle plates with the unlucky number four are auctioned at relatively low prices (Woo & Kwok, 1994;Woo, Horowitz, Luk & Lai, 2008;Chong & Du, 2008;Ng, Chong & Du, 2010). In housing markets, houses with a number ending in eight are traded at a premium, whereas houses with a number ending in four are traded at a discount (Bourassa & Peng, 1999;Chau, Ma & Ho, 2001;Agarwal, He, Liu, Png, Sing & Wong, 2014;Fortin, Hill & Huang, 2014;Shum, Sun & Ye, 2014). In financial markets, culture-inspired number prefer-ences cause particular limit-order and transaction prices to be more frequent than other ones (Brown, Chua & Mitchell, 2002;He & Wu, 2006;Cai, Cai & Keasey, 2007;Brown & Mitchell, 2008;Bhattacharya, Kuo, Lin & Zhao, 2016).…”