France to Count Happiness in GDP - Why Singapore is Still Nowhere Near World Class

Very interesting article in the Financial Times Today. I quote it here, editing it for my purposes.

France to count happiness in GDP
By Ben Hall in Paris

Published: September 14 2009 15:48 Last updated: September 14 2009 19:35

Happiness, long holidays and a sense of well-being may not be (Singapore’s) yardstick for economic performance, but Nicolas Sarkozy believes they should be embraced by (Singapore) in a national accounting overhaul.

France’s president on Monday urged other countries (like Singapore) to adopt proposed new measures of economic output unveiled by a panel of international economists led by Joseph Stiglitz, the US Nobel Prize winner.

Mr Sarkozy, who set up the Stiglitz-led commission last year, said that (Singapore) had become trapped in a “cult of figures”.

Insee, the French statistics agency, would set about incorporating the new indicators in its accounting, Mr Sarkozy said.

One consequence of the commission’s proposed enhancements to gross domestic product data would be to improve instantly France’s economic performance by taking into account its high-quality health service, expensive welfare system and long holidays. At the same time, the commission’s changes would downgrade (Singapore's) economic output.

The commission suggested a series of improvements to the way GDP was measured. It proposed accounting for people’s well-being and the sustainability of a country’s economy and natural resources. “(In Singapore), citizens think we are lying to them, that the figures are wrong, that they are manipulated,” said the president. “And they have reasons to think like that.

Certainly, I do not think we will expect to see the Singapore Government incorporate citizen happiness, well-being or the state of the welfare system into its GDP accounting system.

Because that would make us look like a third-world country. Let's face The Ugly Truth - Singaporeans are stressed out chickens & unhappy rat-racers. They work hard their entire lives just to be able to buy that condo or that landed property & that BMW/Mercedes Benz. Many of them can't wait to get out of the country to some place where they will not be treated as second class citizens in their own back yard.

Indeed, as I explained before, GDP is a lousy indicator of a people's wellbeing. And it's what the Singapore governnment has been using all along to measure its performance and to justify the astronomically inflated salaries of its ministers.

God bless the day we finally depose of the Leegime and have someone who thinks like Mr Nicholas Sarkozy.

Singapore's Quality of Life vs Sweden's

This has got to be one of the best written letters in the ST Forum on Singapore's quality of life and how it's not really as good as the Singapore government makes it out to be. I append it here for my future reference. Emphasis added by me.

For more information on this topic, see "Quality of Life is more than Material Wellbeing: GDP as an Incomplete Measure of Singapore's Development"

Swede quality of life

I REFER to Ms Heng Siew Cheng's letter, 'Why one couple is resettling in Sweden'', (July 17) and the replies by Singapore Senior Minister of State for Finance and Transport, Mrs Lim Hwee Hua (July 22), and 'Where else can you buy your home in 5 years?'' by Mr Peter Wadeley (July 24) My Singaporean wife moved to Sweden in 2001. She gave birth to our first child, a boy, last November. We are now on holiday, extending our first flush of joy of parenting in Singapore with my wife's family.

My wife, a teacher, is on a year's maternity leave. I am on paternity leave for 45 days here. When I return home, I shall still be on paternity leave for three more months. The generous duration of our parental leave is mandated by the state. Mr Wadeley implies that Singaporeans can buy a home in five years. I disagree. Last year, the median household income was $4,870. Even with grants, an average family cannot pay off a flat that quickly. It is also unachievable for Ms Heng and her Swedish husband, even if their collective income barely breaches the HDB's $8,000 bar.

Mrs Lim's comparison is incomplete. Nine in 10 Singaporeans merely lease their homes (HDB flats are typically 99-year leaseholds). Freehold ownership is higher in Sweden: Forty per cent live in landed property, 20 per cent in freehold condos and 40 per cent in rental flats. Swedish rental flats are akin to HDB flats. The main differences are that there is no downpayment, and the rental contract does not expire.

It is true, as Mrs Lim says, that Swedes spend 13 per cent of their income on housing. But for the money, half of us have our own garden - and precious time - to play with our children.

She suggests it is less expensive to raise children here. It is true that consumer goods are cheaper here and Singapore ranks third globally in per capita GDP (purchasing power adjusted) and Sweden 12th, according to the World Bank. But as more of Singapore's GDP comprises imports and exports, the statistic does not reveal the extent of benefit to its citizens.

The World Bank uses Household Final Consumption Expenditure (HFCE) as an affordability benchmark. Including goods and services provided by the government, it tells how much one has for useful spending, either directly or through tax. Sweden's HFCE per capita, in 2005 figures, is US$30,000, (S$42,000) double Singapore's US$14,000.

Ms Heng is concerned about raising children here. Having lived in both countries, I agree. The United Nations' Human Development Index, based on 350 indicators, tracks 'a long and healthy life, knowledge and a decent standard of living'. Sweden ranks sixth worldwide, while Singapore trails at 25th.

I am not advocating the adoption of Sweden's welfare system wholesale. But, if Singapore adopts a tiny part, giving parents flexibility and cheaper childcare, it probably means a tax hike of just a few per cent.

I would like to extend a warm welcome to Ms Heng to Sweden.

Jan Sundström

Quality of Life is more than Material Wellbeing: GDP as an Incomplete Measure of Singapore's Development

The Government likes to tout how Singapore's GDP (Gross Domestic Product) has rapidly grown, it frequently brandishes this metric in order to sell Singapore's economic success to the masses and to convince the public that the country is doing well - and thus buy votes.

But is GDP necessarily a foolproof metric for the country's progress?

Common criticisms of GDP as a measure are that it only measures change in material well-being, and ignores a variety of other, possibly more important factors that affect living standards. You can find these in any Macroeconomics textbook:

• It takes no account of the distribution of income (i.e. whether the rich or the poor are the ones benefiting) (#1)
• It takes no account of the composition of output (doesn't tell us the breakdown of goods and services produced, for all u know GDP grew because we produced more tanks)
• Ignores negative externalities (e.g. doesn't tell us if there has been more pollution as a result of increased production)
• Ignores the allocation of time between working hours and leisure hours (i.e. ignores work-life balance) (#2)
• Ignores "quality of life" issues, which may result with excessive concern with material well-being at the expense of social, moral and religious values. (#2)
• Excessive concern with material well-being can lead to increased crime, increased divorce, marital breakdown, increased suicide rates. (#3)

Don't these criticisms sound familiar?

(#1)We've heard much about the widening income gap in Singapore - focusing purely on GDP fails to acknowledge how the benefits from economic growth are concentrated in the upper income group, while the lower income group sees a fall in its income and the middle income group experiences wage stagnation.

(#2)Focusing on GDP also ignores the fact that Singaporeans spend many hours in the office, working their butts off in the evenings and on weekend, to achieve this economic growth. And time spent at the office must necessarily come at the expense of family, friends, hobbies, and other activities that make life fun.

(#3)And, of course, we need not be reminded of how divorce rates in Singapore are on the rise and how suicides are hitting the headlines. The Government's focus on GDP ignores all these ills of society.

Because of these deficiencies related to GDP, other measures have been developed to gauge a nation's welfare, and perhaps the best known of these alternatives is the United Nations' Human Development Index (HDI)

The HDI brings together three different aspects of living standards. It's not perfect, but it provides a better picture than does GDP alone. The HDI includes

• Real GDP growth as a measure of material well-being
• Average life expectancy as a reflection of quality of health care.
• Adult literacy rates as a reflection of educational standards and attainment. This measure relates to the political situation of the nation - democratic values and freedom are more likely to be achieved in an educated society, as is social tolerance and harmony.

If we look at Singapore's position on the UN global HDI list, we see it is ranked quite highly, at number 25.

However, on deeper scrutiny, we see that this high ranking on the HDI is highly skewed towards Singapore's GDP (#21) and life expectancy (#17), whereas Singapore is comparatively far behind in Adult literacy rates (#46), even behind countries like Thailand and the Philippines, and its also behind in combined primary, secondary, and tertiary enrolment ratio (#35), behind the Russian Federation and Hungary.

As long as the literacy rates remain at such a level, Singapore will face challenges moving up the HDI ladder. It's difficult to see it going much further up in GDP and in life expectancy - hence the chief factor that Singapore needs to work on to improve the standard of living relates to non-material measures - things like higher adult literacy rates, which, as mentioned, is associated with democratic values and freedom.

Despite the more balanced perspective it provides, the HDI also ignores issues related to work-life balance. I shudder to think where Singapore ranks on a global scale with regards to this measure. If this measure was factored into the equation, I hazard that Singapore would rank much lower globally than #25. And then there's the rest of the unaccounted measures like the income distribution, and the rate of suicides... I wonder how these would impact Singapore's global ranking.

So, the next time you see a news article in the press that trumpets how GDP has grown at a rapid pace (read:economy is doing well), pause to think about the deficiencies in the measure! Just because the economy is doing well, doesn't mean the quality of your life is improving. Life is about more than material wealth, and Singapore's progress should be measured by more than GDP!