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Dragons and Diapers: The Economics of the Year of the Dragon

Kung Hei Fat Choi (gōng xǐ fā cái)!

In many Asian communities, this traditional Chinese new year greeting will be shared as we usher in the Year of the Dragon, starting February 10, 2024.  This year is particularly special, since the mythical Dragon is believed to be powerful and auspicious in the Chinese culture.  It is believed that babies born during the years of the Dragon will grow up to become successful in life.

The Chinese zodiac consists of 12 signs: Rat, Ox, Tiger, Rabbit, Dragon, Snake, Horse, Goat, Monkey, Rooster, Dog, Pig.  It is believed that people born in each of these years tend to emulate the characteristics of each animal sign.  The Dragon being a mythical and heavenly creature is believed to be powerful, successful and revered.

So it is no surprise that an uptick in birth rates can be observed in countries like, Taiwan, Singapore, Vietnam, etc. where Chinese influence is widespread during the years of the Dragon.  A study conducted by Agarwal, etal, in Singapore shows that while the annual average births are declining, there are spikes in births during the years of the Dragon: 1964, 1976, 1988, 2000, and 2012.

Moreover, when we compare the birth rates between Chinese and non-Chinese populations across all the zodiac signs, we could see that there is a significant spike for the Dragon.

In fact, fertility clinics also see an increase of clients in the year leading to the year if the Dragon.  The LA-based Agency for Surrogacy solutions and Global IVF have seen a 250% rise in their services tied to the Dragon year. Many Chinese foreigners even travel to the U.S. for more expensive fertility treatments to ensure a higher rate of success.  Surrogacy, which is illegal in China, has also increased in the U.S. for couples who aren’t able to conceive via in-vitro fertilization. Advertising for fertility clinics have also increased the last couple of years leading to the 2024 year of the Dragon.

And most of the well-meaning parents believe that having a Dragon baby sets them up for success and greatness, or do they?

One study shows that it might be the case.  Mocan and Yu, 2020, found that the number of marriages go up two years prior to the year of the Dragon and that births jump in the Dragon year. They have also found that Dragon babies tend to have a college education and higher college entrance exam scores. Even middle school students born during a Dragon year seem to have higher test scores and performance.

Interestingly, the study shows that the results had nothing to do with family background, student expectations of their futures or their self-esteem.  It seems that parents of Dragon babies tend to have higher expectations for their children and invest more heavily on their children in terms of time and money.  The study shows that parents of Dragon children do not have more resources than parents of non-Dragon children; they just tend to spend more time and more money on their children which results in a self-fulfilling prophecy. Many of these parents go through such lengths to even speak to teachers and lessen household chores for the Dragon children.

A self-fulfilling prophecy, is a person’s positive or negative expectation which may affect their behavior thereby leading to the fulfillment of those expectations. For example, if people have negative expectations about the the economy, they may choose to curtail spending, leading to fewer sales and potentially a recession.  These expectations can be powerful as seen in the case of the Japanese economy’s experience of deflation for decades.  People’s negative expectations has led to a long period of deflation: a result of this self-fulfilling prophecy.

But what are the implications for this baby boom of 2024?  Hospitals in Chinese countries and cities with larger Chinese communities like San Francisco, Los Angeles and New York, might begin to see an uptick in deliveries starting next week.  This will be great for the baby care industry such as diapers, baby gear, baby clothing, etc.   However, the elementary school system in these communities and countries, may have to plan for the increased need for facilities and teachers, and this translates to the overall labor market decades from now due to increased competition.  In fact, the unintended consequence of more Dragon babies being born is the increased competition in schools where resources are already scarce and increased competition in the labor market.

So whether you decide to name your baby Dragon after the powerful Smaug, the goofy Mushu, or simply Tom, remember that it’s your expectations and ultimately your behavior that may make or break your child’s future success.

The Gist…

  • Birth rates from Chinese countries and communities will be expected to increase in 2024, the Year of the Dragon, stemming from the belief that children born this year are bound for success in life

  • Studies have shown however that it is due to the self-fulfilling prophecy which affects parents’ behavior and resource support for the Dragon babies that make them ultimately successful in life.

  • The unintended consequences of these upticks in birth rates affect resource planning for schools and even the labor market decades after.

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