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Estimating the superstition value: why not decomposition analysis?

Author

Listed:
  • Hock-Eam Lim
  • Woei-Chyuan Wong
  • Nur Adiana Hiau Abdullah

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.

Suggested Citation

  • Hock-Eam Lim & Woei-Chyuan Wong & Nur Adiana Hiau Abdullah, 2023. "Estimating the superstition value: why not decomposition analysis?," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 28(2), pages 374-389, April.
    • Handle: RePEc:taf:rjapxx:v:28:y:2023:i:2:p:374-389
    DOI: 10.1080/13547860.2021.1928406
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