Academic journal article Economic Inquiry

Do Dragons Have Better Fate?

Academic journal article Economic Inquiry

Do Dragons Have Better Fate?

Article excerpt

I. INTRODUCTION

Traditionally, the Chinese believe that the timing of one's birth according to the signs of the Chinese zodiac determines the fate of that individual. Based on this belief, some parents plan the births of their children according to the Chinese zodiac to give the child an extra endowment of "capital." Indeed, some previous studies have confirmed that the Chinese tend to plan the birth of their child according to the lunar calendar. (1) Goodkind (1991, 1996) studied the timing of birth for several Asian economies, including China and Hong Kong. He found that the Chinese tended to plan more for the birth of their offsprings in Dragon years. A similar story was found in Hong Kong. The plot of birth rates in Hong Kong for the past 20 years shows that birth rates were higher in Dragon years, viz. 1988 and 2000 (Figure 1). See Yip et al. (2002) for a statistical discussion of this phenomenon.

[FIGURE 1 OMITTED]

Several recent news reports also suggested the "investment" motive in the choice of birth timing. The Far Eastern Economic Review (24 June 1999) reported that 2000 (a Dragon year) would be a banner year for births in China. It pointed out that many Chinese would consider the combination of a Dragon year and the millennium a double whammy of good fortune. Consequently, many "couples plan to give their cherished only child a head start in life" by getting pregnant in 1999, so their babies would be born in 2000--a Dragon year. This report pointed out that there was indeed an increase in the number of pregnancies in Beijing hospitals during 1999 with due dates in 2000.

Other reports suggested that Dragons (i.e., individuals born in Dragon years) might have better fortune. Forbes magazine (1 November 2002, www.forbes.com) reported the percentage of the 400 richest American businessmen who were born under each sign of the Chinese zodiac. It showed that 43 of these 400 richest businessmen--nearly 11%--were born in Dragon years, making the Dragon the most populous sign (in this group of 400 successful individuals) among these peers when compared to the 11 other zodiac signs. (2) Such reports supporting the belief that Dragons have a better fortune suggest that they are either luckier or more capable of using their inborn human capital more productively than individuals born in other years.

There are many reasons why Dragons may have better earnings, even if the superstition is incorrect. First, superstition about birth timing may simply be self-fulfilling. If, for example, employers believe that workers born in a Dragon year tend to be more productive, they may be willing to pay a higher salary to hire Dragons. Workers receiving a higher salary may work harder--based on an argument similar to the efficiency wage hypothesis (Carmichael 1989). Alternatively, Dragons may have more pride (because of this superstitious belief), try to be more successful, and thus earn more during their careers. Second, higher earnings may result, because parents who, for example, carefully planned their child's birth in a Dragon year are also more likely to invest more in their child's future through better education. Although higher expectations from parents of children born in Dragon years may drive the children to spend more years studying, some investments by Dragons and their parents may not be as readily available as schooling.

On the contrary, it is not difficult to see the opposite side of the coin. That is, Dragons may end up with lower earnings if many parents believe in the superstition. The reason is that if there is a larger number of individuals born in a Dragon year, this may result in keener competition among them for limited resources, such as schooling and, during their working years, job opportunities. See Welch (1979) for an illustration of how cohort size might affect earnings.

In the literature, only a handful of studies have investigated various cultural superstitions from an economic perspective. …

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