Money for value

My unofficial estimate, based on my experience during this trip, is that the prices of daily necessities are on average about two to three times higher than those of Hong Kong. On average, mind you. The range is quite big. While some items, such as a loaf of bread, cost about the same, some categories, mainly agricultural produces such as fruits and vegetables, carry a price difference of between three to five times.

A more official and often quoted indicator of the consumer price differences between countries is the Big Mac Index. 2009 figures show that a Big Mac in Japan, sold at USD3.46, is double the price of a Big Mac in Hong Kong, which costs USD1.72.

While it is obvious that the cost of living is higher in Japan than in Hong Kong, it is equally obvious that the generally more expensive products are also generally of higher quality. Their food tastes as good as it looks and gives the consumer absolute peace of mind. It is only fair that products (not to say services) of such superior quality fully deserves a hefty price tag.

Another interesting phenomenon is that the difference in GDP per capita between Japan and Hong Kong is not as marked as that of consumer prices. According to IMF figures for 2009, the GDP per capita for Japan, at USD39,731, is only about one-third higher than that of Hong Kong, at USD29,826. But before jumping to the conclusion that Japanese citizens are hard done by, take a look at the difference in the Gini coefficient, which is an index reflecting income inequalities (it is a number between 0 and 1, where 0 means perfect equality and 1 means perfect inequality). While Japan's Gini coefficient, at 0.25 according to 2008 UN figures, is ranked the second lowest in the world, Hong Kong's figure, at 0.43, is a staggering 80 places higher. So the situation in Hong Kong is one of very few people having most of the income whereas that of Japan is that people have similar income.

I remember reading from a travel guidebook that the Japanese boast about most people in the country being middle class. It seems that this is not far from the truth. It is therefore likely that the considerable difference in consumer prices quite accurately reflect the difference in the power of consumption between the majority of people in the two regions.

No comments: