Drilling down Manila’s quality of life index

I DISCUSSED in last week’s column the annual research paper published by Deutsche Bank relative to its mapping of world prices. The Quality of Life (QoL) index is part of the paper’s table of exhibits. The index lists the ranking of major cities in the world arranged from that with the highest quality of life to the lowest.

In 2019, the Philippines (represented by Manila) ranked 54th place out of 56 participating cities in the world. In the mid-year 2020 report Manila, Philippines is no longer in 54th place because there are now 249 cities included in the research for the current Quality of Life Index.  Manila, Philippines is now at the bottom of the list at No. 249 (index of 45.53 as compared to 205.92 of first placer Adelaide, Australia).

As promised, I will discuss the other details of the mid-year 2020 report this week. I have opted to use “drill down” in the title instead of merely “discuss.” Drilling down technically means “accessing successively deeper levels of a hierarchically organized database, records, or set of numbers.”

How QoL index is computed

QoL index  is an estimation of overall quality of life by using an empirical formula which takes into account purchasing power index, safety index, health care index, climate index, traffic commute time index, pollution index, house price to income ratio index and cost of living index. For the first four indices, the higher the value, the better.  For traffic commute time, pollution, house price to income ratio, and cost of living indices, it is better to have a lower value.

The QoL index is the maximum positive value of 100 + purchasing power index divided by 2.5 – house price to income ratio index – cost of living index divided by 10 + safety index divided by 2 + health care index divided by 2.5  – traffic commute time index divided by 2 – two-thirds of pollution index + a third of climate index.

Manila’s indices
 
Please note that the data relative to these indices are updated continuously.  Hence, there might be slight differences on the figures depending on when the site was accessed. The values used here are as of October 28.  The values that I cited last week were as of October 22.

Here are the indices for Manila, Philippines. The first number pertains to Manila’s index while the number in the third column pertains to the index of the city with the best rank in that category.

Again, for the first four indices, the higher the value, the better.  For the last four indices, it is better to have a lower value.

I will drill down further on two important indices — cost of living index, which includes local purchasing power, and traffic commute time index.  I leave the other indices for the government agencies concerned to interpret and study — if they even care at all.

Cost of living index

Cost of living index is a relative indicator of consumer goods prices, including groceries, restaurants, transportation and utilities. The values used in computing the cost of living index are all relative to New York City (NYC). Which means that for NYC, each index should be 100 (percent). If another city has, for example, a rent index of 120, it means that on an average in that city rents are 20 percent more expensive than in NYC. The cost of living index does not include accommodation expenses such as rent or mortgage. Manila has a cost of living index of 41.34 against Zurich, Switzerland’s 131.49.

Rent index is an estimation of the prices of renting apartments in the city compared to NYC. Manila has a rent index of 23.55; that means on average rent in Manila is 76 percent less expensive than in NYC.

Groceries index is an estimation of grocery prices in the city compared to New York City. Manila has a grocery index of 36.85, meaning that the grocery goods here are cheaper by 63 percent than NYC.

Restaurants index is a comparison of prices of meals and drinks in restaurants and bars compared to NYC. Manila’ index is 24.38, meaning that eating in restaurants here is 75 percent less expensive than that of NYC.

Local purchasing power shows relative purchasing power in buying goods and services in a given city for the average net salary in that city. In Manila, the purchasing power is a very low 22.4, meaning that the residents of that city with an average salary can afford to buy on average 78 percent less goods and services than NYC residents with an average salary. How come? The groceries are cheaper here. The rent is less expensive here. Eating out is so affordable.

Why is the purchasing power so low? It is because the average salary is a real rundown and the average-earning worker cannot make both ends meet even if groceries, rent and food are domestically cheaper.  If we want to purchase goods the same way the New Yorkers are doing, then our salaries should be at around five times the average salary.

Should Filipinos be satisfied with their meager average salary? Should we be satisfied with this below par purchasing power?

Traffic commute time index

Traffic index is a composite index of time consumed in traffic due to job commute, estimation of time consumption dissatisfaction, CO2 consumption estimation in traffic and overall inefficiencies in the traffic system.

Time index is an average one-way time needed to transport, in minutes.  In Manila, each one-way commute averages 56.02 minutes as compared to 20.57 minutes in Basel, Switzerland. Time consumption index is an estimation of dissatisfaction due to long commute times. It assumes that the dissatisfaction of commute times increases exponentially with each minute after one-way commute time is longer than 25 minutes. Here in the Philippines, it is 11,398.36.

Inefficiency index is an estimation of inefficiencies in the traffic. High inefficiencies are usually caused by the fact that people drive a car instead of using public transport or long commute times. It can be used as a traffic component measurement in economies of scale. Manila’s inefficiency index is 288.95 (45.14 in Basel, Switzerland). CO2 emission index is an estimation of CO2 consumption due to traffic time. The measurement unit is grams for the return trip. Manila’s value is 7,885.08 grams for a two-way trip. In Tokyo, Japan, it’s only 1,143.14.

This means that Filipinos spend as much as three times the amount of time commuting. Worth mentioning is the stress caused by the dissatisfaction in having prolonged commute times. Filipinos are stressed and dissatisfied 496 times compared to their counterparts in Adelaide, Australia in terms of commuting times.

Now you know why we have the lowest quality of life on this side of the world.

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