Impact of Inclusion of Capital Income on Singapore's Gini Coefficient
Ministry of FinanceSpeakers
Summary
This question concerns MP Mr Louis Ng Kok Kwang’s inquiry regarding the inclusion of capital income in Singapore’s Gini coefficient and its potential impact on the measurement of income inequality. Second Minister for Finance Mr Lawrence Wong explained that the Gini coefficient currently uses household income from work to ensure timely tracking, as non-work income data is more susceptible to measurement errors. He clarified that although non-work income is captured in the quinquennial Household Expenditure Survey, it is not included in the Department of Statistics' annual Gini computation. The Minister affirmed that the government continues to explore better ways to monitor inequality while maintaining progressive social support measures targeted at lower and middle-income households. He concluded that capturing non-work income remains a difficult task internationally and emphasized the government's commitment to data reliability.
Transcript
21 Mr Louis Ng Kok Kwang asked the Minister for Finance (a) what is the Gini coefficient of Singapore for each year in the past 10 years when capital income is taken into account; (b) if such data is not available, whether inclusion of capital income is likely to increase or decrease Singapore's Gini coefficient; and (c) whether the Ministry will take into account capital income when reporting Singapore's Gini coefficient.
The Second Minister for Finance (Mr Lawrence Wong) (for the Minister for Finance): Mr Speaker, Singapore computes the Gini coefficient based on household income from work. This data is available annually and enables the timely tracking of income inequality.
Collecting income data from sources other than work is more challenging. Such data are typically collected based on self-reporting by respondents and are more susceptible to measurement errors. This is why the Department of Statistics has thus far not included such data in its computation of the Gini coefficient.
Nevertheless, the Government will continue to explore ways to better measure and monitor income inequality. Regardless of the measurement issues, our approach remains to keep our social support measures progressive and targeted at the lower and middle income households.
Mr Louis Ng Kok Kwang (Nee Soon): Mr Speaker, I thank the Minister for the reply. I do understand that we do include capital income once every five years in terms of our calculation for our Gini coefficient. If we can do it once every five years, why not do it every year? I also understand that, for example, all the other OECD countries do include capital income. So, why does Singapore not include this?
Mr Lawrence Wong: Mr Speaker, I should clarify. I think Mr Louis Ng is mistaken. We do have surveys of income other than work in the household expenditure survey. It is not part of the Gini coefficient computation. So, that income is covered in the household expenditure survey which is done once every five years. As I have said just now, collecting data on income other than work is always fraught with issues, not just for us but for other countries as well. But we are continuing to see how the data can be better captured.