In my previous post, I discussed Singapore. Today’s FT has an article about Singapore, which contains this interesting fact:
The city, which is one of Asia’s leading financial centers, has been ranked as the most expensive in the world for nine of the last 11 years by the annual Worldwide Cost of Living survey from the Economist Intelligence Unit.
That surprised me for a few reasons. First of all, I have been to Singapore several times and I did not find it expensive. Second, I remembered some IMF PPP comparisons that suggested Singapore was actually cheaper. When I double-checked, my memory seemed correct:
If you divide 88.45 by 133.74 you get 66.1%. In plain English, the IMF estimates the cost of living in Singapore to be a staggering 33.9% lower than the cost of living in the US. Not 33.9% below NYC, rather 33.9% below the US average. There is an almost crazy discrepancy between the IMF’s claim that Singapore is the cheapest city and surveys that show Singapore is the most expensive city in the world. What gives?
Fortunately, FT connects to a useful linked article that explains the authenticity of the prices in Singapore. The synopsis of “TLDR” is as follows:
1. Singapore is a very expensive city for business expats who wish to rent an independent apartment in a trendy central area, own a private car, and have a golf club membership.
2. For ordinary Singaporeans who live far away and don’t own a car, the cost of living is quite reasonable.
The title is the same as I noted. I remember the subway fare was low and the restaurant food was cheap. I think many other services that use low-skilled temporary workers imported (for example, nannies, nail salons, home remodelers, etc.) are also cheaper. Here’s what the linked article says about shipping costs:
Owning a car in Singapore is more important than in other countries – no debate about that! That’s because the certificate of eligibility (COE) that every car owner has to buy is about $75,000 cheaper for a sedan – and that’s not including the cost of the car, road tax, fuel, and insurance.
It is a factor that has a major impact on Singapore being ranked as the most expensive city in the EIU study.
There is a reason for that, though. Given Singapore’s small size, the volume of traffic on the road is carefully managed to ensure we meet sustainability goals and avoid the traffic jams common in congested cities.
Coupled with Singapore’s compact size, the efficient and affordable public transport infrastructure means that owning a car is not necessary. This is unlike big cities where it is often an hour or more to drive to your destination.
If you really need a car occasionally, rental services like GetGo are an affordable option starting at $2.20/hour and going up to $65.50/day. Long-term rentals start at $283/week for non-luxury models.
Taxis and ride-hailing services such as Grab, CDGzig or Gojek are readily available in Singapore for around $11 to $26 per trip, less if you opt for a shared ride.
It should be noted, however, that this article is a government-sponsored rebuttal to a cost of living survey that claimed Singapore was too expensive.
In my opinion, the truth is somewhere between these two measurements. Remember mine previous post arguing that Newport Beach is the best place to live in America. That claim was based on a study that showed Newport Beach to be the most “unaffordable” city in America (population over 100,000). of average income. Inaccessibility is an indicator of “revealed preferences”.
Central Singapore is highly desirable, especially for business travelers who want to be closer to the action. So the high “cost of living” is actually a measure of its attractions.
But overall Singapore is attractive, at least compared to many other Asian countries. So real estate even in the outer states is more expensive than most of the US. An American family with a 2500 square foot home, a nice yard, and 2 SUVs in the driveway, will have a hard time restoring their lifestyle if resettled in Singapore. They will view the IMF estimate as a gross underestimation of Singapore’s cost of living.
On the other hand, Singaporeans enjoy a low cost of living in many areas, including places that are more important than restaurant food and nail salons. Health care is inexpensive and income taxes are very low.
My general sense is that Singapore does very well on the service-oriented measures of cost of living (and maybe some imported goods), and the US does relatively well on “tangible goods” based measures of cost of living.
In the US, dense coastal cities like New York are more expensive for people looking for big houses and cars. It wouldn’t surprise me if the studies get a political side, with Republican consumption baskets skewed slightly toward goods, and Democrat consumption baskets skewed slightly toward services.
So the cost of living depends a lot: How is the cost of living?
PS. Singapore also does well in many “intangibles” that do not show up in price indices. The subways are clean and functional. Crime is very low. There is much less pollution and traffic than other Asian cities. On the negative side, there is less freedom of speech. After my previous post, Jim Glass provided insightful commentary on Singapore’s excellent healthcare system, and the political obstacles to translating that success to other countries.
PPS. Even the quality of service is highly dependent. Americans who like to eat steak and potatoes in a large restaurant with fancy seats may not like it broker’s markets where most Singaporeans eat. Tyler Cowen likes these restaurants:
PPPS. Yesterday, a New Zealand tourist was killed during a traffic jam at one of Newport Beach’s best shopping malls. This is a reminder that even America’s safest places wouldn’t be considered that safe by Singapore’s standards. Indeed, even Canada’s homicide rate is 20 times higher than Singapore’s.
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