Does Fortune Favor Dragons? Noel D. Johnson and John V.C. Nye George Mason University

Transcription

1 Does Fortune Favor Dragons? Noel D. Johnson and John V.C. Nye George Mason University

2 Why Do Beliefs Persist? How irrational are irrational beliefs? How do superstitions about luck or success survive in foreign environments where the beliefs are unshared? What role do modernization and economic growth have on these beliefs?

3 Enter the Dragon East Asians (esp. ethnic Chinese, also Korean and Japanese) believe that children born in the Year of the Dragon are luckier and likely to do well in life

4 Demographic Spikes Strong Dragon Year birth effects in 1976, 1988, 2000 Pronounced for overseas Chinese Taiwan, Hong Kong, Singapore, Malaysia, but NOT China (PRC)

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6 Percent change in lunar year crude birth rates relative to previous year for dragon year 1976 Tiger Rabbit Dragon Snake Total fertility rate Rabbit Taiwan Singapore (Chinese) Malaysia (Chinese) PR China Hong Kong Singapore (Malay) Malaysia (Malay) From Goodkind, 1991, Table 1, p. 667.

7 Dragon crowding Strong concern in the home countries about dragon children Crowded cohort increases competition for places in school and university Potential negative impact on dragon outcomes Government issues warning to discourage dragon births before 1988 and 2000 with only limited effect

8 Others Claim No Effect Wong and Yung (2005) find no income effect for dragon year births BUT their data is from 1991 and 1995 too early to show big effects from 1976 cohort Simplistic cross-sectional OLS estimates cannot correct for age/birth cohort correlation or potential endogeneity.

9 Asians in the US Focus on the educational outcomes of Asian Americans in the US (notably immigrants) born in 1976 Data from pooled cross section data of the U.S. Current Population Surveys 2000, 2002, 2004, 2006, and 2008 Diff-in-Diff framework: Asian vs non- Asian immigrants (and vs. US pop n)

10 Not All Asians Of the major Asian American groups we leave out Indians, Filipinos, and those from the PRC as the largest notable groups that did not show dragon shifts in their home countries Most other Asian nations that do not share the dragon superstition are a small fraction of the total

11 Do Asians Living in the United States Believe in the Dragon Superstition?

12 Dragons Do Better in School Asian-American dragons have a third of a year more education than non-dragon Asians Looking only at immigrants increases to almost a half a year of education

13 Table 1: Mean Education by Ethnicity and Birth Year Asian Non-Asian Difference Dragon Year (0.170) (0.039) (0.174) Non-Dragon Year (0.067) (0.013) (0.064) Difference (0.183) (0.041) (0.186)

14 Table 2: Summary Statistics for Chinese-Asian and Non-Asian Comparison Groups, Non-Asians (control group) Asians (treatment group) Variable Obs Mean Std. Dev. Obs Mean Std. Dev. Education Sex Age Income Dragon Sample weights from CPS used to calculate statistics.

15 Table 3: Summary Statistics for Immigrant Chinese-Asian and Non-Asian Comparison Groups, Immigrant Non-Asians (control group) Immigrant Asians (treatment group) Variable Obs Mean Std. Dev. Obs Mean Std. Dev. Education Sex Income Age Dragon Sample weights from CPS used to calculate statistics.

16 education ics = β 0 + β 1 asian ics + β 2 dragon ics β 3 dragon ics *asian ics + α s + φ c + X B + ε ics Controls: gender income state fixed effects age fixed effects year of birth effects

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20 Taiwan confirms effects Pooled cross-section doesn t allow subgroup matching But focusing on Taiwanese immigrants in 2000 shows that those born in 1976 dragon year are 6% to 7% more likely to hold a bachelor s degree than non- Taiwanese immigrants born in same year

21 Table 5: Summary Statistics for Taiwanese and Non-Taiwanese Comparison Groups, Non-Taiwanese Asians (control group) Taiwanese (treatment group) Variable Obs Mean Std. Dev. Obs Mean Std. Dev. Bachelors Log Income Sex Age Dragon

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23 Dragon babies have good mothers Fertility data from those born in 1988 and 2000 show that their Asian mothers are more educated, richer, and older than non-asian mothers of babies in the same years Because of self-selection, these parents seem more able and willing to adjust birth strategies to favor dragons

24 Table 7: Summary Statistics for Mothers of Only Children and All Mothers, Mothers of Only Children Mothers of One Child Or More Variable Obs Mean Std. Dev. Obs Mean Std. Dev. Income Education Age at Birth (months) Asian Dragon AsianXDragon

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26 Conclusions Dragon birth jumps come in wealthier countries making the demographic transition Mothers engaging in the dragon birth strategy are older, more educated, and higher income than the average Effect is not present for mothers of more than one child

27 Conclusions The dragon superstition is a self-fulfilling prophecy (Merton, 1948) Selection mechanism consistent with Becker and Lewis (1973) Children are normal goods. As parent income increases, fewer, but higher quality, children are desired. Having a Dragon child is a relatively low cost way to get higher quality.

28 Above Average Dragon Baby Education Outcome Greater Investment In Dragon Babies Parents Update Priors Parent Income? Parent Education? Parent Genetics? Selection Into Dragon Cohort by Richer, More Educated Parents Family Structure?

29 Possible extensions Do U.S. citizens of Asian ethnicity continue to have preferences for dragons? Do the dragon babies earn higher incomes in the long run? Are there marriage effects? Why do there seem to be such large mother education effects on the kids? With increased ease/desirability of dragon kids does this weaken the parent quality effect?

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31 Asian: Dummy variable equal to one for the population that reports their race as Asian minus those who identify with mainland Chinese, the Indian subcontinent, Pakistan, or the Phillippine Isalnds. Asian is defined in the Census as a person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian subcontinent including, for example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam. It includes Asian Indian, Chinese, Filipino, Korean, Japanese, Vietnamese, and Other Asian. Asian Indian. This category includes people who indicated their race as Asian Indian or identified themselves as Bengalese, Bharat, Dravidian, East Indian, or Goanese.