Forum: Spending on an individual's well-being likely to benefit society and economy too

Straits Times opinion editor Grace Ho's helpful review of a study on the minimum income standard by researchers from the National University of Singapore's Lee Kuan Yew School of Public Policy and Nanyang Technological University, and the Ministry of Finance's response to it, neglects to consider the economywide impacts of the individual costs enumerated (Does a family of 4 really need $6,426 monthly for a basic standard of living? It depends, Nov 21).

This is admittedly a limitation of both the study's focus-group methodology and the aggregate household expenditure surveys cited by the ministry.

The ensuing discourse focused on needs versus wants and necessities versus luxuries is essentially subjective and values-driven.

Hence disagreement is likely in a diverse society though the focus-group sampling attempts to achieve a consensus.

But taking the data-driven approach of social benefit-cost analysis favoured by economists and business analysts shows that even expenditure considered to be "discretionary" for a particular individual is likely to benefit the economy and society as a whole, because it increases collective productivity.

Decades of international educational research, including in China, show that self-esteem and perceived social support reduce delinquency and enhance schoolchildren's academic achievement (and thus their future career success and economic independence).

Having the financial wherewithal to participate in enrichment activities, social outings and overseas trips thus has a long-term payoff to society in excess of the social cost and individual benefit of immediate improved well-being.

Recently, studies in countries such as Britain and the United States have drawn a link between mental health and business productivity.

In the US, corporate wellness programmes are all the rage now that it has been proven that better employee mental health reduces absenteeism and work behaviours that undermine productivity (and thus profit), as well as physical illnesses like heart disease and hypertension.

Workers' improved well-being reduces healthcare costs for employers and for society as a whole.

Some employers now make taking vacations (and switching off virtually) compulsory. Some tech start-ups even offer "unlimited vacation time".

Social participation (which includes exchanging gifts and sharing meals outside the office) has also been shown to improve workplace collaboration (productivity) just as it does students' school performance.

In this context, spending $50 a year on jewellery or perfume, or to take a holiday in nearby Johor or Batam, to make an individual "feel better" is both cost-effective and productivity-enhancing.

For economists and for business, meeting the minimum income standards for some will make us all better off.

Linda Lim