Singapore wealth – mean and median?
[12 Oct 2010]
Singapore has rapidly developed into a wealthy country during the last 50 years.
In a recent Straits Times article, Singaporeans ranked 4th for personal wealth (Sat 9th Oct 2010, article no longer available), journalist Gabriel Chen writes:
Singaporeans are the fourth richest people in the world in terms of personal wealth [with an average adult wealth of US$255000] and second richest in Asia-Pacific, according to a Credit Suisse report.
[Singapore is] behind Switzerland (US$372,692), Norway (US$326,530) and Australia (US$320,909), but ahead of major developed economies like France, the United States and Britain in the Swiss bank’s inaugural Global Wealth Report, out yesterday. [...]
“Wealth” is defined as “real” assets (like housing) plus cash and investments minus debt.
Now, the next sentence caught my eye (emphasis is mine):
While Singapore’s mean wealth of US$255,488 is extremely high, its median wealth is approximately just one-ninth of that, at US$30,092 per adult. Median refers to the wealth for the “middle” of the adult population distribution here, while mean is the average.
Now, this raises some interesting issues, one of which is mentioned in the article:
While the disparity between median and average wealth here seems to imply a high level of wealth inequality, DBS economist Irvin Seah disagrees.
It certainly does imply such inequality. In an earlier article, I pointed out that Singapore’s Gini Coefficient (a measure of wealth equality) is quite high, indicating a fairly poor distribution of wealth. Singapore’s Gini Coefficient comes somewhere between China’s and the USA’s.
Back to the article. I was not sure about this next conclusion, so I decided to investigate it:
The findings suggest most of the wealth is accumulated around the middle to upper-middle income group, with “most Singaporeans doing better than their peers in other countries”, Mr Seah said.
If the wealth were normally distributed, then we would expect the graph of the situation to look like the following, with the mean (average), median (mid-point, where 1/2 of the population is above and half is below that figure) and mode (the most-often occurring wealth figure) all being equal to $250,000 (in round figures).
However, according to the article, the median is around $30,000. What will the graph look like now?
It turns out it will look something like this (where each class interval is $20000 wide, and the first mid-point is $10,000):
I’m assuming, of course, that no one has wealth beyond $500,000 so that my graph is readable. This is not the case and there are quite a few millionaires in Singapore. I’m also assuming there are around 3 million adults in Singapore.
Our graph shows the distribution is (heavily) skewed to the right.
So yes, Singapore has quite a high proportion of quite wealthy people, but don’t miss that very large number of people (over a million) in the $0 to $20,000 interval. There are many battlers in Singapore.