Monday, November 23, 2009

Is GDP a good measurement of life quality?

Consider the following (excerpted) statement by Robert Kennedy in 1968

“…And if the Gross National Product includes all this, there is much that it does not comprehend. It does not allow for the health of our families, the quality of their education, or the joy of their play. It is indifferent to the decency of our factories and the safety of our streets alike. It does not include the beauty of our poetry, or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials… the Gross National Product measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country. It measures everything, in short, except that which makes life worthwhile….”

In Singapore, the government’s competency is assessed based on its ability to grow GDP year on year, quarter on quarter. Every civil servant’s bonus and salary increment depends largely on it. Does high GDP reflects high quality of living?

Consider that GDP is calculated using the following formula: Investment + Consumption + Government Expenditure + Net Exports

GDP measures the total income and total expenditure (since total income will equals total expenditure). It is also the total market value of all final goods and services provided within a country in a given period of time.

Intuitively if we compare countries with high GDP per capita over lower ones, we can see and feel the difference. If you have been to Japan, you will definitely find the quality of life there to be higher than Singapore. The reverse is true for Malaysia or China.

So how does GDP which is quantifiable able to measure quality of life which is not easily quantified?

GDP does not measure the health of Singaporeans. However, because of a larger GDP and high savings rate, Singaporeans are able to afford better quality healthcare. The budget for education has been growing (2nd largest after defence), thanks to high GDP.

This results in bright students becoming top surgeons, enhancing our pole position as medical hub in Asia. With good education infrastructure in place, quality teachers are employed to produce bright students in local institutions. This in turn helps to increase the production output of our labour, thus increasing our GDP.

High GDP countries allow citizens to access to quality education systems, thus many would be able to admire the beauty of poetry, humanities and arts when given the opportunities and education.

Marriages in high GDP countries though tend to be more fragile as there are more interaction and distractions among people. In fact, high GDP countries tend to have lower birth rate (though not always). This by economics theory might suggest that children are in fact inferior goods! Do not forget that as income rises, consumers switch from inferior goods to normal goods. In our local context, Singaporeans switch from having babies to having pets. Hence humorously, children are inferior goods and pets are normal goods (at least for some people!). I do believe that some pets cost much more to keep than children though!

That said, GDP does not also take into account our wisdom, compassion and our devotion to our country. However, with our basic needs being fulfilled (due to high GDP), we will be able to move up the hierarchy of human needs and foster the above attributes.

There are many arguments that GDP is NOT an accurate or good tool of measurement of well being. I will leave the points of discussion for another day.

Thursday, November 19, 2009

Are Singapore girls’ expectations beyond the sky?

Lately, I have been mingling with many of my classmates. Most of them are single, late 20s, with a high paying job and drives a cool vehicle. Sometimes during chill out sessions, they will inevitably talk about their expectations of a boyfriend or partner.

This brings an inspiration for today’s post.

I am absolutely flabbergasted by the standards they have set for their future boyfriends and husbands.

A: I would expect him to earn at least $12,000 a month. Anything less than that is either he is lousy or deserve a lesser human form as wife.

B: He does not need to earn the sky, but he must provide everything for me. I will not want to fork out a single cent for my wedding and matrimonial home.

C: I have even “simpler” needs. He just need to ensure that I can give up my job anytime I want to, possibly if I want to retire by 35, he is able to provide for me and our kids. Hopefully he has his own business and I can give up my job to help him. But he must at least be matching my $10,000 salary now lah! Or else no point giving up my job to work with him right? (Well, his business must be doing extremely well then!!)

D: Well, I expect a romantic proposal from him. Just a wonderful private apartment bought under my name will do. I will love him more!

Sgbluechip: WOW, please do not consider me! I earn a gross $5,000 monthly and will barely touch the $80,000 mark after including all bonuses and allowances. I thought that finding a life partner is beyond dollars and cents, which cannot be quantifiable even with the most abstract model?

A B C D: No worries, we will never consider you! Well, though money does not guarantee happiness, but we do want our husband to earn at least 30% more than us. In that way, we can feel secured and pampered.

Sgbluechip: Well, the median income for Singaporeans is only roughly $3,200 and average income possibly around $4,500. That includes the income of the high net worth individuals which in reality depicts and inadequate representation of the society’s income and standard of living.

Enough said.

A B C D all drives a nice car, earns a 5 figure sum monthly, works in MNC and are under 30. They are highly eloquent and well groomed, somewhat different from the girl next door working in a small company.

It seems that many girls around me are always using their girlfriends’ most eligible boyfriend/husband as a benchmark to set their “vision” and “mission”.

Many Singaporean guys lament that our local girls are pampered and have unrealistic expectations. This might be quite true, especially for girls who have high salary and credentials. Sometimes, I do feel quite amusing mingling with them. I mean, why do people attach monetary value for every single thing they do in their life, including their marriage?

Economist have time and again pointed out that GDP is never a good indicator of standard of living. And by that, it means that an equation of money and happiness can never be drawn even by Einstein. Yet many are conveniently drawing a simple equation with it.

Is there any module in universities that teaches people to love money less?

I think it will be useful to improve every graduate’s real standard of living.

Well that said, I think my perception is only limited to the people I hang around with. I am sure there are many nice girls (which I have also come across) that prefer their guy to be simple. Just a stable career, earning say $3,000 monthly, faithful, homely and reliable guy to be their life partner more than satisfy all expectations.

Not to worry, such guys are a dime a dozen. Let’s just leave the rich boys for A B C D since they live by the adage that money provides all solution and create no problems.

Monday, November 9, 2009

2009 Monthly expenses breakdown

It is always good to track your expense and savings as you will be able to better plan your finance. Below is a rough breakdown of my monthly expenses. I am not quite done with it, but I do think it reflects an 80% accuracy.


Lunch at workplace: $6 daily x30 days =$180
Restaurant: $20x4=$80 (Weekly)

Subtotal: $260

My workplace provides cheap food for us as we are lowly paid. I spend an average of $80 dining outside. I do not have a girlfriend (no time and opportunities) and this is probably why I spend so little on dining. Dinner is usually at home with parents.


Petrol: $150
Parking: $65 (HDB) +$20(outside home)=$75
Maintenance servicing: $20
ERP: $6
Road Tax: $80
Insurance: $57
Miscellaneous: $12

Subtotal: $400

I have fully repaid my car loan earlier to save on interest, hence there is no loan expenses on it. I live near my workplace and that explains the low cost on fuel. Parking is free in my workplace. I go to comfort delgro for cheap and good servicing. To me, a car is a workhorse, so it will not be shiny and be doubling as a fishing rod to pick girls up.

Family commitments

Allowance: $500

Subtotal: $500

I give 10% of my gross monthly salary to my parents.

Personal expenses

HP: $25
Cable TV: $40
Clothing expenses: $30
Insurance: $240
Hair Cut: $10

Subtotal: $345

I do not buy clothes every month, but probably every 6 months when the sale is in town. Hence, that explains the low cost I spend on fashion (averaged) monthly. The cable TV hubstation has bundled together complimentary broadband and home line. The actual amount incurred on telecommunications and TV is slightly lower as my cable TV costs me merely $25 monthly (promotion price).


Tour: $200
Movies plus dvd/drama series rental: $10
Books and magazines: $10 (including reserving from library @$1.50)

Subtotal: $220

I go on tours once or twice a year and spend about $2400 annually. I love to read and will reserve books online at least once a month to satisfy my craving for knowledge. I do not like to buy books as they take up space and I rarely read more than twice for any 1 book. Also, I tend to procrastinate reading books that I buy. Borrowing makes me ensure I finish reading the book by the 3 weeks deadline. I subscribe to the Edge Magazine for weekly market updates

Total expenses per month: $1725

Total expenses per year: $20,700

One thing I did not include is my $30k Masters fees. If I were to factor it into my monthly expenses, it would be $840 monthly (considering I need 3 years to complete).

This would increase my monthly expenditure to $2565. This is a hefty sum that would require me to earn at least $3,500 monthly to fuel the monthly expenditure. However, I have already prudently set aside a sum of money for my studies and hence, the “one off” expense will not be factored into my monthly cash outflow.

There will be occasional indulgences like buying a new handphone or laptop. However, I abstain from buying such “wants” as I would rather invest my money (in stocks and education) for future returns. My current desktop is bought in 2001 by my father when I entered university. I am proud that I am still using it. The only upgrade I given it is an additional RAM and Windows XP. My company provides a powerful 4GB Ram and 1GB graphics card laptop for work. I do not own much technology gadgets as I prefer very much to keep life simple at the moment.

It is therefore conservative to say I am able to invest $46,000 cash per year from my career income after taxes. It is worthy to note that due to the nature of my work, it has helped me to attain huge savings. If I were working in the CBD area, I believe I will spend much more on food, clothes and leisure.

I am sure many people would deem me as stingy. But this label is only applied when they compare Sg Blue Chips relative to themselves. I have no issue with anyone spending his/her pay to the last cent as I respect that it is their way to demonstrate passion in life. It just so happens that the pleasures that I obtain in life are just so affordable and simple.

These days, reading a good book, the Straits Times, Edge Magazine or Economics and Finance textbooks together with a cup of green tea at starbucks have eaten away many of my weekdays’ nights and weekends’ afternoons. The pursuit of quality education and knowledge can be enjoyed rather economically. Ostentatious goods are still not quite my kind of indulgence. I would rather people admiring me for being knowledgeable than having a sports car, anytime.