Wednesday, May 14

The relative cost of living

The following is a simplified example. It doesn't take into consideration the resale value of the motor vehicle. Neither does it consider costs of other items/bills eg. property/renting property.

A car in Malta costs Lm8000.
The same car in the UK costs Lm6000.

In Malta, the car costs 33.33% more. Or does it?

If, in Malta, a buyer saves up Lm200 a month, it would take him 40 months to buy the car.
If in the UK, another buyer (same job, higher wage) saves up Lm350 a month, it would take him 17 months to buy the car.

The car costs the Maltese person 135% more time saving up.

After 40 months, the Maltese buyer will have finished saving up and will finally have a car.

When the Maltese buyer will finally have the car, the UK buyer will have had the car for 23 months and apart from buying the car Lm2000 cheaper, he will also have saved up a further Lm8050. That opportunity cost adds up to WAY more than 33.33%.

Read also Standard of Living in Malta


Jacques René Zammit said...

Interesting post Keith. As you rightly made clear at the beginning it is a simplified example and does not take into consideration a number of factors.

One important factor would be road tax, insurance and the like. Road taxes in England are not exactly cheap. Also if you travel by car in the UK you will notice that often parking comes at a premium. This is not to say that this is not also happening in Malta but until now I would guess that the cost of using the car includes much more hidden costs in the Uk than it does in Malta.

On a different but related note I personally believe that a comprehensive transport policy for Malta should aim at a dramatic reduction in the use of cars - and part of such a policy would be maintaining high (inefficient) costs for car owners. Of course to do this you would have to increase the efficiency of public modes of transport dramatically.


Amen to that.

My top gripes with public transport as it is:
+ there are still too many buses built before 1990 (or 1960) around
+ there are no ticket offices. you have to queue when you step on the bus, which takes time. As a result...
+ ...they're rarely punctual
+ and most importantly there's the fear you'll miss the bus because it's early. If they're early, they should wait, as happens abroad. Who's going to risk getting to work an hour late ghax ghaddiet kmieni?

Anonymous said...

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