Posted by: Daryl & Wendy Ashby | November 27, 2010

Cultural Preferences

A University of British Columbia study has found that Chinese number preferences can drive real estate prices of certain addresses up or down in neighbourhoods with large numbers of ethnic Chinese residents.

The study, the largest to date in an emerging field of research on the economics of number beliefs, explores the impact of “lucky” and “unlucky” Chinese numbers on more than 115,000 residential real estate sales in the Greater Vancouver region over five years.

In neighbourhoods where the percentage of ethnic Chinese residents exceeds the regional average of 18 per cent, the study found that houses with addresses ending in the lucky number eight sold at a 2.5 per cent premium, while those ending in the unlucky number four sold at a discount of 2.2 per cent.

This translates into a premium or discount of between $10,000 and $8,000, based on a $400,000 average price of a single family house in Greater Vancouver during the 2000-2005 sample period.

“Our study shows that Chinese number preferences affect real estate prices in neighbourhoods where the census shows higher percentages of ethnic Chinese residents,” says lead author Nicole Fortin of UBC’s Dept. of Economics, who will present the study at the Annual Meeting of the American Economic Association in Denver, Colorado, in January.

Using data from the Canadian Census and the B.C. Assessment Authority, Fortin found the phenomenon present in 43 per cent of Greater Vancouver’s 361 census districts, including many in Vancouver, Richmond, Burnaby and Coquitlam. These are neighbourhoods where people who self-identified as “ethnic Chinese” on the census exceeded 18 per cent of the population.

The research topic was proposed by UBC honours economics student Jeff Huang, who immigrated to Canada from Taiwan in 2004 and wanted to put Chinese number beliefs to a scientific test.

The numbers’ positive and negative associations – which are rooted in feng shui, the ancient Chinese system of aesthetics – stem from how they are pronounced, Huang says. In many Chinese dialects, including Mandarin and Cantonese, four (四: sì) is a homonym for the word death (死: sǐ) and eight (八: bā) is phonetically similar to the word for prosperity or wealth (发: fā).

Despite the findings, Huang says the study does not suggest everyone of Chinese heritage holds these preferences, or acts on them. “Obviously, there will be differences from person to person. For example, these beliefs may be stronger for recent immigrants than people whose families have lived in North American for generations.”

Huang adds: “Our study suggests these numbers are significant to enough people in these areas that there is a corresponding impact on real estate prices.”

The research team, which also included PhD candidate Andrew Hill – believes the findings will apply to other North American regions with significant Chinese communities, including New York, Los Angeles, San Francisco, Honolulu, Seattle, New Jersey and Toronto.

Fortin says real estate agents, buyers and sellers who are unaware of the phenomenon could be at a competitive disadvantage. “This shows that the address of your house can be more of a selling feature in some markets,” she says, noting that some real estate companies market houses ending with the number eight or 88 – the “double joy” number – to prospective buyers from China.

Of the 115,000 Greater Vancouver house sales between 2000 and 2005, nearly 14,000 had addresses ending in eight and more than 7,260 had addresses ending in four. The team also found evidence of houses with addresses ending in 13 being sold at similar discounts in other neighbourhoods.

The study is available at: http://faculty.arts.ubc.ca/nfortin/Superstition.pdf

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