Is Singapore the most expensive city to live in?

Answer is… we don’t really know. It is, if you are an expat. Or at least that is what the EIU’s most recent report concluded. Some Singaporeans then used that as evidence that the overall cost of living in Singapore is high. Then others came out to say that that’s not true.

It only appears to be so because expats spend on very different things compared to most Singaporeans. One example is cars. The EIU report stated that Singapore’s cost of transport is extremely high because of the cost of owning a car (thanks to COE!). But most Singaporeans don’t own cars.

The Singapore government has come out officially to attempt to explain why Singapore isn’t the most expensive city to live in. It even did up a nice infographic:

Infographic  Is Spore the most expensive city to live in final1

Infographic by Gov.sg

At first glance, the infographic does seem to provide some explanation why the EIU’s conclusion that Singapore is the most expensive city to live in is not accurate. There are other more affordable options for the things that most Singaporeans need. However, it is also wrong to conclude just based on this infographic to then conclude that Singapore isn’t the most expensive city to live in.

Why?

Because just as the basket of consumption by ordinary citizens in Singapore are different from the basket of consumption by expats, it is likely that the basket of consumption by ordinary citizens of other cities are different from the basket of consumption by expats.

If we were to compare the prices in the basket of consumption by ordinary citizens in Singapore versus the basket of consumption by ordinary citizens in other cities, would Singapore still be the costliest city to live in? We don’t know. Because we don’t have the data of the prices in the basket of consumption by ordinary citizens of other cities.

Even if we did have all that data, it really still doesn’t matter. Trying to figure out if Singapore is the most expensive city to live in for ordinary citizens is not asking the right question. It really doesn’t matter how expensive a city Singapore is so long as ordinary citizens can afford to live well in Singapore.

More specifically, I think what really matters is whether there is a sizeable proportion of ordinary Singaporeans who are finding it hard to make ends meet because their incomes aren’t enough to meet the costs of having a decent life in Singapore. And there are some studies done on this.

Based on the Household Expenditure Survey conducted in 2012/2013, “the Average Household Expenditure on Basic Needs (AHEBN) for a four-person household was about S$1,250.” In other words, if a four-person household doesn’t earn at least $1,250 a month, then that household isn’t able to meet its basic needs.

Yeoh Lam Keong, former chief economist of GIC and current an adjunct fellow with the LKY School of Public Policy, estimated that about 10% to 12% of Singaporean resident households earn less than $1,250 a month. I can’t find whether all these households hae four members, or more, or less. But if they have four members or more, then the conclusion is that 10% to 12% of Singaporean resident households earn less than is needed to meet their basic household needs.

But that’s only BASIC needs. It is estimated that “family of four in Singapore requires an income of S$2,500-3,000 per month in order to invest in human capital and create the possibility of social mobility or a life beyond continued basic subsistence for adults or children of the next generation.”

About 23% to 26% of Singaporean resident households have incomes below $3,000 a month. In other words about 23% to 26% of Singaporean resident households are below the “social inclusion level of income” . What does that mean?

You know… when you kid goes to school, and other kids have money to go eat at MacDonald’s and jio your kid… but your kid can’t go because he doesn’t have the money to buy food from MacDonald’s. Or when most of the kids in school go and watch that cool new movie and your kid can’t go because he doesn’t have enough money. And then when the other kids are talking about that really cool movie, your kid can’t take part in that conversation. So your kid feels excluded. That is what it means to be below the “social inclusion level of income”.

These are more important metrics to be concerned about. Not whether we are the most expensive city to live in. If we are the most expensive city to live in but every segment of our society has the highest incomes in the world, then who gives a shit whether we are the most expensive city to live in?

Alas, that isn’t really the case. There is a huge segment of Singaporeans who don’t even have enough income to meet their basic needs. And There is a huge segment of Singaporeans who feel left out because they don’t earn enough. And mind you. These are people who are working and earning, not just bums sitting on their assess not doing anything. That. Is the real problem.

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