"Truth is stranger than fiction, but it is because Fiction is obliged to stick to possibilities; Truth isn't."
- Mark Twain
In an earlier article, we discussed the Gini index in detail and suggested an alternative to measure inequality with data pertaining to consumption rather than income. We queried earlier whether the Gini coefficient computed by the Department of Statistics (SingStat), Ministry of Trade and Industry has taken taxation and transfer money payments (for example, the Progress package in 2006) into account.
An occasional paper on income statistics entitled "Key Household Income Trends" is released today from SingStat. Two interesting issues are discussed in this paper: (i) the impact of the recent Progress package to the lower income households and (ii) the calculation of Gini coefficient with the income data adjusted with government benefits and taxes. Matching our earlier argument (see Reynolds "Income and Wealth"), the Gini coefficient has dropped from 0.472 to 0.439 (adjusted with government taxes and benefits included) in the year 2006 (as compared to 0.468 in 2005). According to them, the drop is attributed largely to the Progress Package that was weighted in favor of the lower income group. Does that mean the inequality between the different income groups has decreased? Since they did not recompute the earlier figures with the modification of taxes and pre-transfer payments from 2000 to 2005, the question remains unanswered.
With this new revelation on the Gini index, can we contest the earlier claim from the Citigroup report on the emergence of a dual track economy in Singapore? The answer is no. To address that question, we have to dig deeper in the General Household Survey 2005 data and examine the assumptions and inferences leading to that conclusion.
Acknowledgments: The author thanks Speranza Nuova for bringing the SingStat paper to his attention.
Comments (7)
Once again the genius of the PAP govt shows up. It can narrow the income gap by changing the accounting rules. I would like to suggest more changes to the accounting rules, since they are so eager to get to the truth:
Can they include capital gains when they compute Gini? Since they are adding all sorts of one off govt benefits to reduce our Gini score. What about untaxed dividends? What about interest from savings.
I'm sure if they include all that our Gini score will "improve" to a higher level so our Hong Kong competitor cannot keep up.
I wonder why our national secret secret strategy for 'generating the greatest bestest corporate profits'...by depressing income and widening the gap has been leaked out by SingStats. Usually our beloved PAP govt keep such national secrets under wraps. ...just like the unemployment figures for SINGAPOREANS. ...they now report unemployment for RESIDENTS and no-one can figure out how many SINGAPOREANS are unemployed.
Since our national secret is out, I'll be doing a comparison piece about the income distribution between us and Hong Kong which gives out welfare to its poorest.
With such a smart govt, we get the biggest corporate profits as a % of GDP in our history. We teach our poor to eat maggie mee, disempower them progress packages & HDB upgrading, dilute their numbers by growing our population to 6.5M importing new citizens.
Posted by Lucky Tan | February 13, 2007 11:45 AM
Is the dual track economy such an unbelievable concept? Especially when Singapore is a small and OPEN economy.
Posted by ted | February 13, 2007 11:50 AM
Gini Index:
http://photos1.blogger.com/x/blogger/2862/1607/1600/747100/gini.jpg
Posted by LuckyTan | February 13, 2007 11:55 AM
Ted,
Nope, it's not hard to believe that that our economy is going dual track. However, the problem is how they come to the conclusion and their usage of income distribution does not convince me. In fact, the link to social mobility has been debunked in the review by Reynolds, by examining the same situation but in a Swedish case study. I am not going to contest beyond the Gini index which I found not to be a good indicator of inequality. The prediction I made earlier about the Gini Index is reduced by pre-transfer money and taxes came true.
In fact, I am also pondering why SingStat suddenly published this number with an occasional paper. Of course, they did not throw out the past numbers, so we can't compare apples to apples, and oranges to oranges. Perhaps, maybe the Gini indexes are not appealing from 2000 to 2005.
Lucky Tan,
Thanks for the picture.
Posted by Bernard Leong![[TypeKey Profile Page]](http://perspectives.singaporeangle.com/nav-commenters.gif)
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February 13, 2007 12:14 PM
If we factor in other incomes like investment incomes and asset appreciation the rich commonly enjoy, the rich-poor gap is more serious.
Posted by Sarek | February 13, 2007 10:40 PM
Is anyone aware of statistics demonstrating the social mobility of Singaporeans? I am looking to determine how an average Singaporean is likely to fare in terms of upward and downward mobility compared to an average American.
Posted by arthur winter | December 19, 2007 7:00 AM
CIA world fact book dated 24 July2008 listed Singapore gini as 52.2(0.522)in 2005,that is a huge difference in percentage term.
Why,the only reason I can think of is PAP does not really want it to be known,especially the citizens of Spore
Posted by Hope | July 27, 2008 12:22 PM