It is a Chinese tradition that during Chinese New Year, older (and usually wiser) married people would give red packets (Mandarin: 红包 - hong bao; or Hokkien: Ang Pau) to younger, unmarried people. Inside these red packets, there would be money (yay!!!), usually in even numbers (though these few years it started to be a trend to put 5 dollar notes in them). Yearly, with zeal, younger, unmarried people (like me) would count greedily how much money the new year has brought in.

Naturally, this year is no different. Except this year, I was wondering how much I had lost by not actively seeking relatives who would give me ang paus due to my playing mahjong. From that, I proceeded to wonder how much I actually got from my relatives every year. From there on, a string of other weird questions arise, but ah, well, let’s tackle the first question:

So, how much I actually get yearly?

To answer that, I’d first need to get hold of data - yearly collection of Ang Pau money. For that, I turned to my dad. My dad had meticulously collected data on how much money is collected yearly, inclusive of who gave how much. I had 21 years worth of data with me.

On first look, it seems that I collect more and more money each year, but do I really? The simple answer is no.

Taking into account inflation, I am actually getting less money each year (though there is a weird trend in the money collection). Below is a graph of what I receive and the inflation adjusted amounts.

The yellow line and dots are the amount I receive each year, while the blue line and dots are the inflation adjusted amounts I received. 2004 and 2005 are zero-amounts because of a data crash that happened prior to the Chinese New Year of 2006, and the latest backups didn’t have the data for those 2 years. There are no numbers for the amount received, obviously for privacy reasons, but you can rest assured that none of the years has had a total of higher than RM 600.

As for the inflation adjustment, I used 1987 (when the data just started) as a base, so it’s all in 1987-dollars. Because of the impossibility of finding out any price indices in Malaysia (Dept. of Statistics provides statistics for the past 3 years only!!) I used the basic assumption that inflation is at 4% per annum.

Hah! My relatives are actually giving less and less money per year! Next year would be a good year to brandish this graph in their face and demand more money lol!

Next Year?

Not that I worry anyways. Here, some guesswork is involved, but if it is as trend goes, the collection for 2004 and 2005 can be estimated. The trend for the previous 6 years can be seen to come in threes. If the trend prevails, it can be estimated for the year 2004 and 2005, the collection amount is roughly around the red dots in the picture to the left. So, with the missing information filled in with estimates and rough guesses, I can second guess what I will get next year, lol.

Roughly how much will I get next year? Excel’s forecast says I will get about 4 dollars less than this year. But if I treat the amount collected as sort-of-a-market, I can use moving averages to estimate whether I will get more or less than this year.

I used a 2-year (light blue line) and a 4-year (dark blue line) moving average for this um, estimation-of-sorts. Every time the two lines cross, it is an indicator that the trend direction will change. This year is a year where the moving averages cross, and since it’s been on a down trend, the cross would indicate a probable up trend beginning next year (probably for another 3 years of down trends)

Of course, it could also continue the down trend - hence breaking the trend where a high is followed by 2 consecutive lowers which is followed up by another high. One probable reason would be some of my relatives stumbling on this blog and collude not to give me any money next year, lol!

The cause of collection fluctuations

One reason why my collection seem to fluctuate is not because of the varied collections from different people. In fact, throughout the 20 years worth of red packet collection data, the collections from people is very consistent - i.e people who give every year. Even if the data used to plot the graphs and calculate the inflation adjustment was controlled - the people who did not give consistently (5 years in a row) are excluded from the total amount collected - the results would be very similar. The inconsistent givers are insignificant (they do not give much anyways).

So why the fluctuations? Because the relatives who actually give the red packet vary the amount yearly (especially from 1987 to 1993, where some would give RM 4 one year and RM 10 the next, and RM 2 the year after the next). The “rich” aunt and uncles do however, give the same amount consistently, while there are upgrades along the way by other relatives. Heh, but 10 dollars in 1987 is certainly worth more than 10 dollars in 2007. But there you go - consistency.

Another reason of the fluctuations are deaths and marriages. Some years, relatives die, and the total becomes less, but some years, there are new couples who got married and give red packets raising the total. Some how… they all sorta fit into a trend (see above). Hmm..

As all economics deal with incentives, I personally feel that there are some relatives who have the incentive to give more. Whether to show off that they are getting richer, or just to generate a feel-good feeling. Someone who regularly gave RM12 gave RM 30 this year (she has been suddenly nice to me all of last year). I have no idea why. Maybe she came into a windfall. Maybe something else. Personal incentives are indeed hard to figure out.

So how much did I miss out from playing Mahjong?

Surprisingly, not much. The difference between my collection and my sister’s is about 20 dollars. Which rounds to about 4 relatives who didn’t give me any ang paus. And it’s 2 lunches worth. Oh well. Then again, I assume that she was actively seeking, and not playing with the cat.

The cost and effects of Free Money

Where can you get free money? My accounting lecturer, Steven Toh called ang paus free money. Riiight. Free money? At what cost? If I had gone back to Penang solely for ang paus, the cost would have been exorbitant. Toll charges, petrol costs, 10 hours at the highway waiting for the traffic jam to ease off… those are all costs. But thank goodness I didn’t go back only for red packets. Instead, to me, red packets are a positive externality, because I went back to Penang for the festivities. Heh… it’s indeed free money for me . Well.. this is proof that free lunches do exist. Unless you count greeting your aunty “新年快乐,万事如意, 恭喜发财, 红包拿来” (Translates to: Happy New Year, May Everything be Fortunate for Everything You Do, May You Prosper, Give Me A Red Packet) a cost. LOL.

Seriously, though, Ang Pau is just a token. I mean, one year’s worth of red packets wouldn’t sustain me for one month - and I’m known to my friends to be one of the more economical spenders (actually, cfgt is the most economical spender I know, but since he has more supply of money to spend, it seems he spent less economically than me. On the other hand The Princess is the most exorbitant spender I’ve known)… But there are effects of free money. People tend to spend more when there is extra money floating around (including governments), so I’d expect Princess Xingyi to spend more in the short time frame.

To any relatives of mine who might have stumbled on this site, no, it’s not a critique. It’s just a product of my extremely bored mind, and a whole set of nonsensical questions that ultimately, got to this page. I understand that red packets or ang paus are merely tokens of tradition. But that doesn’t give you reason to give me less next year as well, lol!

Ah, but I enjoy free money, LOL.

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