The New Paper today (23 November 2008) ran a column by "Harvard-trained economist" Zhen Ming, who's self-styled moniker is Boston Brahmin. It's on page 16 if you have a copy of it handy.
The gist of the column had to do with the net wealth of the average Singaporean household, and how despite the recession, the average Singapore household has actually grown in wealth and is in relatively good shape for the economic downturn. I reproduce the statistics below:
AssetsCurrency & Deposits $136,310 $157,930
Shares and Securities $75,340 $120,360
Life Insurance Equity $30,750 $76,820
CPF/Pension Funds $94,190 $119,930
Residential Property $386,830 $384,920
Total Assets $723,420 $859,970
Mortgage Loans $106,800 $110,390
Personal Loans $38,450 $39,180
Total Liabilities $145,250 $149,570
NET WEALTH $578,160 $710,400
The source is from the Yearbook of Statistics Singapore, 2008. Interestingly, the figures that Zhen Ming cites are slightly different from those I found online (p. 201), but they are in the same ballpark (no foul there).
This column is a reminder why everyone should school themselves to have at least a passing familiarity with statistics.
What are the problems here?
First up, "average wealth of the Singaporean household" can refer to the mean, median or mode. In this case, (I have to admit that I didn't check) it seriously looks like the figures refer to a mean rather than the median. There is good reason to believe this since households run the gamut from young couples with no kids, to nuclear families to retirees whose children have flown the nest. Each of these types of households have a different spread of assets vs liabilities (retirees are likely to have much less in the way of liabilities vs young couples) so it wouldn't really make sense to calculate a median instead of a mean.
Now what's wrong with reporting the mean. Nothing, except that it is well known that Singapore has a high and rising Gini coefficient (p. 14) and that the mean conceals the fact that many Singaporeans have far less in the way of net assets than the figures above suggest.
Next, time lags in the data being reported. The Yearbook of Statistics provides data only up to end-2006 (which admittedly was still boomtimes), and Zhen Ming compares these figures to end-2000 (when Singapore was just coming out of the Asian Financial Crisis). I think it's safe to say that the comparison in net wealth between these two periods, while informative, tells us little that we would not otherwise expect. Oh, and if you're thinking of the comparison between end-2000 vs end-2006 and vs end-2008, I also think that it's safe to say that the economic environment in 2008 has deteriorated markedly since end-2006 (like duh).
In particular, assets such as currency deposits (especially forex holdings in AUD and NZD, highly popular among naive Singaporeans for their high interest rates), shares and securities, equity-linked endowment assurances, and real estate are likely to have fallen in value since end-2006 (and will continue to fall in value).
Finally, the effects of inflation may not have been accounted for. If they haven't been adjusted, the figures for end-2006 should be deflated by approximately 4.32% going by the CPI figures reported by Singstat. Adjusting for inflation however, does not address the other problems I have listed above. It's also pertinent to note that inflation has been especially detrimental to the finances of the lower income groups, particularly since it has been reported in the past that their real income has actually fallen in past years.
[I understand the irony in analyzing an article published in a tabloid like the New Paper in such detail as I have done here, but the same accusation could be levelled at Zhen Ming. Harvard-trained or not, telling the typical downmarket New Paper readership that their average household wealth is north of half a million dollars is to invite ridicule.]