For some reason, an article titled “How much do you need to earn to be above Singapore’s “average”?” was making its rounds on my Facebook feed. Although I know that these kind of headings are link baits but what can I say? I’m a sucker for these kind of articles.

It’s painful to read stuff like this from a website in Singapore that is supposed to be promoting financial literacy. After all, this is supposed to be the reason why their site exists.

Enter DollarsAndSense.sg, a local website that aims to be the destination for timely, relevant, and useful information on personal finance matters presented for the ordinary Singaporean in a bite-sized, interesting, and enjoyable manner. Being run by a group of young Singaporeans in their mid 20s, DollarsAndSense.sg has no hidden agendas, no sales pitches to make and best of all, no credit cards to charge.

Anyway, the beef I have with the article on that site is that they obviously have no clue what they’re talking about.

The article starts with using GDP as a measure for income. While in theory, there should be no difference in calculating GDP using the income or the expenditure approach*, the problem here is should we even be using GDP as a proxy for one’s income?

Common sense would tell you not to since the salaries to workers are just part of the remuneration for the value created that GDP measures. At the end of the article, the writer even tells us the more important statistic that the median income in Singapore is SGD 3,770 per month which is all you really need to know if you want to figure out whether you earn more than the bottom half. By the way, even that is not completely true to the title since the average and the median in Singapore is far from being the same. Those that don’t know why should go learn some statistics.

So, given the title, most of the article is completely useless because it just tells us what the GDP per capita is (so is the useless calculation of adjusting the per capita figure for just the labour force) and the main point is actually in one sentence somewhere near the bottom.

By the way, the average Singaporean probably doesn’t know this but you can easily get average and median income data from MOM’s website (here and here) that shows you median income over time and even categorised by industry occupation so any one who’s really interested  in comparing doesn’t really need to read a half-assed article to know.

So what’s the value of THIS post?

1) Don’t believe everything you read out there. Most of it is bullshit written by people who don’t know any better.

2) GDP is not a good proxy for worker’s income. However, GDP and wages are correlated which is why, all else equal, most citizens in a country with higher GDP is able to have a higher income than most citizens in countries with lower GDP.

3) People trying to improve financial literacy should just leave economics out of it. There are economic theories that could help people become more financially literate but I’ve found that what helps more is a dose of common sense.

Anyway, the people running that site should be happy that some people who read this are probably going over to check them out but in my book, at their current level, I think that they are the ones who need help.

Notes:

*GDP measures the market value of all final goods and services produced in a country in a calendar year. Since there is a buyer and seller for each good, the value of the good produced is also the income earned by the seller of the good. This is where the writer of the article tripped up since the full value of the good sold doesn’t go to the worker. Not all of us are workers, some are bosses.

– By the way, it looks like they have the guts to acknowledge some of the mistakes in their article by posting some of their readers’ comments in an edit and I wrote this post after seeing those updated comments but my opinion hasn’t really changed much.

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