Estimating the Value of Chinese Superstitions in Car Plate Number of '8': A Nonlinear Decomposition Analysis

Abstract

Estimating the value of numerical superstitions using the hedonic regression method faces an empirical challenge to separate the superstition and non-superstition components. In Malaysia, the number of eight is a lucky number by the Chinese as its pronunciation carries the meaning of “prosperity”; while for the non-Chinese (Malay), it is a neutral number (non-superstitious). This provides a natural setting to use the nonlinear decomposition analysis to remove the non-superstition component from the superstition where the hedonic regression is not able to handle. Using a sample of car plate auction data in Malaysia, this paper estimates the value of superstition in number of eight. The value of superstition is estimated to be RM965 by the hedonic regression. The nonlinear decomposition shows that it is only around 37% to 45% of the estimated superstition value (RM965) can be attributed to superstition. This indicates that the estimation of previous studies on superstitious value of number of eight using the hedonic regression model might be subject to a substantial upward bias.