RM5,900 a month income is simply not true

By Steven Sim | TMI
9 September 2014

People say politicians often tell lies. But really, more often than not, they actually give us statistics. What is the difference? I’ll let Mark Twain tell you: “There are three kinds of lies; lies, damned lies and statistics”.

The latest statistics our government proudly brandish at us is the report that household income in Malaysia has surpassed RM5,900 a month. This was presented by Datuk Seri Abdul Wahid Omar, the former Maybank boss roped into the Cabinet as “economy minister”.

Intuitively, most Malaysians know it’s a farce. Why?

Because many families we know, maybe including our own, earn much lesser than RM5,900 a month.

Because even the government itself proudly claimed that its cash transfer programme BR1M has benefited 80% of Malaysian households. The only condition for BR1M is that a recipient household must earn less than RM3,000 a month.

Because as recent as September of 2013, the government said that 82.5% of young Malaysians below the age of 30 earn below RM3,000 a month. They constitute more than one-third the workers in Malaysia.

Because according to the 2012 Household Income and Basic Amenities Survey (HIS/BA 2012), the bottom 40% of Malaysian households only earn about RM1,800 per month.

Additionally, while the HIS/BA 2012 already noted that the average Malaysian household earns RM5,000 a month, 50% of Malaysian households actually earn less than RM3,626 monthly.

How did that happen?

Statistics, the art of telling official “lies”

(Caveat: I love statistics because if used responsibly, they provide useful insights into reality.)

The “economy minister” used the latest HIS/BA 2014 which has yet to be published by the Department of Statistics on its website. Hence, I will use the HIS/BA 2012 to illustrate how he has cleverly used statistics to paint a rosy picture of our earnings.

Abdul Wahid used mean household income to demonstrate that we are already earning RM5,900 a month. In the HIS/BA 2012, as mentioned above, the mean household income was already RM5,000 a month. This was basically arrived at by averaging the total income of all households with the total number of households.

As we all know, an average works well if the data set is symmetry, i.e., if everyone has roughly the same salary in this case. Otherwise, a one or two greater values in the set will significantly skew the average from the other values.

We may just add a local twist to the famous anecdote: Bill Gates entering into a workmen’s bar, immediately turned everyone into a millionaire, if a minister like Abdul Wahid comes in to take an income survey and presented the mean income of the bar patrons.

On the other hand, the HIS/BA 2012 also reported that the median household income in Malaysia was only RM3,626. Median gives a better picture of an asymmetrical set of data, that is, a set with values which differ greatly from one another. It divides the set equally into two parts above and below the median value.

Thus according to the HIS/BA 2012, 50% of Malaysian households actually earn less than RM3,626 monthly although the average income is RM5,000 a month.

Both are valid statistical outputs, so what is the problem?

If you ask me, the problem with such “dishonesty” is not much about the government lying to us but rather the government lying to itself. By patting its own back on the so-called achievement, the government created a false sense of its own success, thus risked ignoring the real situation and the work that still needed to be done.

During my first parliamentary sitting in 2013, the self-same “economy minister” proudly told the House that because our country’s unemployment rate was below 4%, according to economist John Maynard Keynes, we can be deemed to have full employment. Since then, I have been pointing out that such self-congratulatory perspective continues to blind the government towards the real condition of employment in this country, ranging from high unemployment among young Malaysians including graduates to the issue of underemployment, from unfair industrial practices to gender discrimination in the job market, from our over-dependence on low-skilled migrant labour to brain drain.

Similarly, when someone the stature of an “economy minister” says we are already earning RM5,900 a month, the government risked overlooking the actual problems of low wages, high cost of living, high indebtedness among Malaysians and income inequality.

Even with all the reports showing economic growth, we have failed in the last 20 years to achieve any significant improvement to close the gap on inequality.

According to Second Finance Minister Datuk Seri Ahmad Husni, Malaysia’s Gini Coefficient Index, which measures inequality (0 means perfect equality, 1 means perfect inequality), was 0.431 in 2012, one of the highest in the region, compared to countries such as Thailand 0.4 and Indonesia 0.37.

Thus, the problem about telling lies is not that others will be convinced but rather the one telling the lies believed his own lies.

* Steven Sim is DAP MP for Bukit Mertajam.

  1. #1 by boh-liao on Tuesday, 9 September 2014 - 12:54 pm

    Gomen reply: It’s MEAN household income, stupid

    Who cares abt many households dat earn RM500.00 a month or some that earn RM50,000.00 a month – as long as d mean is RM5,900 a month, nice mah, sui sui lor

    M’sia boleh n bagus lar

  2. #2 by Bigjoe on Tuesday, 9 September 2014 - 1:12 pm

    We need a lesson in statistic. Dividing the total income by the total household, does NOT give the average household income OR the mean household income. It just gives the Average of Households Income. Wahid, as a finance professional and presumely passed more likely a distinction in his Stats 101, simply will be committing a fraud and fiduciary failure if he calls the average of household income, average household income.

    Also, statistically, its not even the average household income that matters but rather what is the Mean of Household income and 1 standard deviation from the mean that matters..

  3. #3 by good coolie on Tuesday, 9 September 2014 - 2:31 pm

    If you reveal some statistics, you may be imprisoned for an array of offences.

  4. #4 by boh-liao on Wednesday, 10 September 2014 - 9:19 am

    “Thus, the problem about telling lies is not that others will be convinced but rather the one telling the lies believed his own lies.”

    Ai yoh yoh, surely d author, a politician, must know dat rakyat r fed n bombarded with LIES every day

    SHOW rakyat 1 politician (UmnoB/BN or PR) or gomen kaki, religious or not, prays 0,1 or many times a day, who does not spew out lies, more lies, n damned lies

  5. #5 by Justice Ipsofacto on Wednesday, 10 September 2014 - 11:08 am

    Whaaaa, got meh?
    Got so much ah?
    How come i like sooo poor?
    Like got not enuf money all the time one?

  6. #6 by waterfrontcoolie on Saturday, 13 September 2014 - 8:12 am

    This is the average for the nation, so if we put the bottom half at $2,000 and then the next 40 % at $4,000 then the leadership and cronies making only 10% of the population would indeed average US$ 5,900 per month or US70,800 PCI

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