Black‐Cat Markets: Superstitious Beliefs, Extreme Events, and Housing Prices in China

Abstract

ABSTRACT This paper examines the extent and persistence of numerological superstitions in China's housing market. We focus on the numbers “4” and “8,” given the strong negative and positive cultural beliefs associated with them. Using an extensive dataset of new apartment transactions from 2004 to 2015, we assess pricing patterns by floor level and unit number. We find that numerological preferences and aversions associated with superstitious beliefs have non‐negligible price effects. Exploiting the 2008 Wenchuan earthquake as an exogenous shock, we show that these effects adjust in response to a major disruptive event. After the tremor, numerological preferences tied to unit numbers appear to have intensified, consistent with heightened uncertainty and increased salience of numerological cues, whereas those linked to floor levels weakened, plausibly reflecting increased perceived risks of living on upper floors that reduced the weight placed on prior numerological associations.