Why many Asian megacities are miserable places

And why Shanghai and Tokyo are not

For seven decades Tokyo was considered the world’s most populous city. That was 15 years too long, according to data released last month by the UN. Until recently the organization's statisticians accepted national governments’ definitions of where their cities began and ended; their latest report accepts the reality of urban sprawl.

Cities are home to 45 per cent of the global population, with megacities continuing to grow, UN report finds

By their new measures, Jakarta, Indonesia’s capital, jumps to the top of the board with 42m people, about as many as Canada. Dhaka, capital of Bangladesh, with 37m, has also

pulled ahead of Tokyo, with 33m. Delhi and Shanghai, with around 30m people each, fill out the top five.

The UN’s latest figures highlight tremendous urbanisation. These days 45% of humanity lives in cities (with at least 50,000 people); another 36% inhabit towns (with at least 5,000). The data also show that much of the growth is happening in middle-income Asia. Only one of the world’s ten biggest cities lies outside that continent. And only seven of the world’s 33 “megacities” (boasting over 10m people) are in rich countries.

By 2050 Jakarta and Dhaka will between them add another 25m people, nearly as many as live in Australia. These migrations should help make people better off. “Dhaka changed my life and secured my kids’ education,” says Clinton Chakma, who found a job as a waiter after migrating from a farm in 2022.

Yet there is also a huge risk: that as Asia’s cities expand, squalor, pollution and gridlock increasingly undercut the economic boost they provide. “People move to cities to be part of the labour market,” says Alain Bertaud of New York University. But if the labour market does not work “you build a poverty trap”.

The number of “megacities” (10 million inhabitants or more) continues to grow; over half are in Asia

Jakarta, Dhaka and Delhi already rank among the world’s worst cities to live in, according to the Economist Intelligence Unit, our sister company. Jakarta ranks 132nd out of 173 cities; Delhi is 145th. Dhaka comes third from last, with only Damascus and Libya’s Tripoli behind. If Asian countries are to break out of the middle-income trap, they must solve the problems that plague their cities. The best way of doing that is not through piecemeal projects, but by taking a hard look at the dysfunctional ways urban areas are governed. 

These migrations should help make people better off. “Dhaka changed my life and secured my kids’ education,” says Clinton Chakma, who found a job as a waiter after migrating from a farm in 2022.

Yet there is also a huge risk: that as Asia’s cities expand, squalor, pollution and gridlock increasingly undercut the economic boost they provide. “People move to cities to be part of the labour market,” says Alain Bertaud of New York University. But if the labour market does not work “you build a poverty trap”. Jakarta, Dhaka and Delhi already rank among the world’s worst cities to live in, according to the Economist Intelligence Unit, our sister company. Jakarta ranks 132nd out of 173 cities; Delhi is 145th. Dhaka comes third from last, with only Damascus and Libya’s Tripoli behind.

If Asian countries are to break out of the middle-income trap, they must solve the problems that plague their cities. The best way of doing that is not through piecemeal projects, but by taking a hard look at the dysfunctional ways urban areas are governed. Jakarta—nobody’s idea of a lovely city—is as good a place as any to see all this on the ground.

After years of expansion it now encompasses the neighbouring cities of Bogor, Depok, Tangerang and Bekasi (see map). Yet there is far too little co-ordination among these neighbouring authorities. A settlement as populous as some countries is governed as coherently as a clowder of cats. The cost of this fragmented governance is perhaps best seen in Jakarta’s notorious traffic. It is the world’s 12th-most congested place (Dhaka ranks third and Delhi seventh). Unable to afford housing near their workplaces, many Jakartans live in far-flung suburbs. A vastly inadequate public transport system encourages them to travel by two-wheelers or in cars, which jams up the roads and causes air pollution. All this cuts productivity.

The government of Jakarta reckons traffic jams cost its economy $6bn each year. In 2019 Jakarta got its first metro line. But it stops abruptly at the city’s official administrative boundary, short of commuter neighbourhoods. There is an urgent need for co-ordination within the agglomeration, says Adhika Ajie, the head of research and innovation at Jakarta’s city government. “Otherwise it’s useless.” Good luck with that.

“Throughout my time there was very little conversation with other mayors of surrounding cities,” says a former official in the city administration. Similar problems affect megacities elsewhere in Asia. Dhaka has enveloped satellite cites with which it has little co-ordination. But it also suffers from being run by two municipal corporations, a national development authority, several ministries and dozens of different agencies which are individually responsible for things such as water, sewage and transport.

A mayor of Dhaka North City Corporation once complained that he lacked the authority to deal with 80% of the problems that affect his city, including traffic and flooding. Parts of India, now home to five “megacities”, are in the same boat. Governance in Delhi is split between municipal bodies, a state government, the national government and several bodies created to oversee matters such as housing, planning and the metro rail. The Kolkata metropolitan area (the world’s ninth-largest) contains no fewer than 423 different governing entities, according to the World Bank.

How do successful cities do it?

One model is Shanghai, which is run by the central government as a province rather than a city. It exercises strong, centralised authority over all major urban functions, from planning to transport. But China’s governance model is unique: pressure on leaders comes not from voters but from bosses in Beijing. Party leaders cannot afford to let areas of the city grow unruly. A better model is Tokyo.

The Tokyo Metropolitan Government (TMG) is responsible for big-ticket public services such as water, sewage and public hospitals. Beneath it sit 23 wards and a host of peripheral cities and towns. Each municipality has its own elected mayor and assembly, responsible for services such as schools, waste management and community planning.

The TMG co-ordinates between them. It is a sensible split that clearly delineates authority while also making sure that decision-making is joined up. Like the megacities of middle-income Asia, Tokyo has no single government body for the greater metropolitan area, which includes parts of the neighbouring prefectures of Kanagawa, Chiba and Saitama. But the national government plays an important role in coordinating between them. And a dense metro and commuter-rail network ties the region together. Over 90% of people in the greater Tokyo area live within a 20-minute walk of a station. It helps, of course, that Tokyo is richer than other Asian megacities.

When it became a city of 20m in 1965, Japan’s GDP per person was $9,500 (at 2011 prices). When Dhaka hit that number in 2005, per person income in Bangladesh was $1,900. Yet making Jakarta, Dhaka, Delhi and other Asian megacities more liveable can start with changes to governance, not with huge investments.

Overhauling power structures is harder than splurging on big projects. But the potential pay-offs are mega.

Source: The Economist

64% of Filipinos can’t afford P10,000 medical bill without borrowing

A majority of Filipinos, or 64%, cannot shoulder a P10,000 medical bill out-of-pocket without borrowing money or relying on a health maintenance organization (HMO), according to a new study by global management consulting firm Boston Consulting Group (BCG).

BCG’s Filipino Family Study surveyed 1,515 families nationwide.

The report found that financial strain emerges even at lower thresholds: 20% of respondents said they would likely borrow for a bill under P1,000, 28 percent for P5,000, and 16 percent for P10,000.

Grounded in this reality, BCG said seven out of ten families identified health security as their top concern, surpassing savings, education, and home ownership.

“We at BCG think that it’s partly driven by the pandemic,” Lance Katigbak, principal at BCG, said during the study’s launch.

“Not because health is a new priority for us, but because so many Filipinos within that one event experienced that situation where everyone had to pool together money to pay for that hospital bill.”

BCG noted that just one emergency surgery or extended hospital stay could already push most Filipino families into years of debt.

The study also highlighted a mismatch between HMO coverage and what families truly prioritize during health emergencies. Mr. Katigbak said many Filipino adults are likely to delay their own care, even with the same symptoms, to prioritize children and elderly relatives.

Coverage gaps remain stark: only 15% of children are covered by HMOs, compared with 27% of seniors and 47% of adults.

The Filipino Family Study continues BCG’s earlier report, The Filipino Dream, and the Heart of Hustle, which featured Filipino Micro, Small, and Medium enterprises (MSMEs).

Source: Business World

How to enjoy your money without regret

Many people work hard to save and invest, yet when it comes to spending, they often feel guilty. For some, every purchase feels like a dent in their financial future. For others, impulsive buying leads to regret the next day. Either way, money becomes a source of stress rather than enjoyment.

Behavioral finance helps explain why. Studies show that people do not always spend rationally. Emotions, habits and mental shortcuts influence our decisions, sometimes leading to happiness and sometimes to regret. By understanding these patterns, we can use our money with less guilt and fewer regrets.

Traditional economics once assumed that people act rationally and that they weigh costs and benefits before making decisions. But research in psychology and behavioral finance shows that reality is far more complex.

Money is more than a way to pay for things. It carries emotions, which explains why people feel outraged when they see politicians misuse public funds on lavish lifestyles. Every choice to spend or save reflects our fears and hopes.

One reason spending feels complicated is what psychologists call anticipated regret.

Studies led by Thomas Gilovich of Cornell University in 1998 on anticipated regret show that people often avoid spending because they imagine regretting it later. They picture a future where they wish they had saved instead.

Ironically, the same thing happens in reverse for impulsive spenders. They focus only on the excitement of buying and forget the regret that may come later. This push and pull is why spending often feels more emotional than logical.

Mental accounting

Another reason is what researchers call mental accounting, a concept popularized by Richard Thaler in 1985. His study, published in the journal Marketing Science, showed that people divide money into separate mental “accounts,” such as essentials, savings and discretionary use.

Take dividends or bonuses as an example. Many people see them as money that is safe to spend, while selling investments feels more like taking money out of your nest egg. The money may be the same, but the psychology is very different.

If money is meant to make life better, then the real question is how we spend it in a way that truly makes us happy.

Back in 2013, behavioral researchers Elizabeth Dunn and Michael Norton explained in their book “Happy Money” that happiness has less to do with how much you spend and more with what you spend it on.

Their research showed that experiences such as a vacation, a family celebration or even a simple day out with friends tend to create deeper and longer lasting joy than material purchases.

A brand new gadget or luxury item might thrill you at first, but the feeling fades quickly while memories often grow more valuable with time.

Meaningful spending

Another study by Cassie Mogilner Holmes of UCLA and her colleagues in 2016 found that spending brings the most satisfaction when it matches personal values.

People who used money to strengthen relationships, pursue growth or support meaningful goals reported higher life satisfaction than those who saved too much or spent without purpose.

What this tells us is simple. Happiness is not about the size of your bank account but about how well your money supports the life you want to live.

Imagine three retirees with the same savings. The first is so worried about running out of money that he barely spends. He skips the trips he dreamed of and avoids hobbies he once wanted to try.

When his health finally slows him down, he realizes the real loss was not the money but the memories he never made.

The second goes the other way. He spends too much on luxuries and drains his savings too fast. By the time he gets older, the lifestyle he once enjoyed becomes impossible to sustain. What remains is stress instead of comfort.

Then there’s the third. She sets aside enough for essentials and long-term security but also reserves a portion for enjoyment. She books trips early, savors the excitement of looking forward to them and creates memories with her family. By striking this balance, she avoids both the regret of holding back too much and the pain of spending too much.

Live without regrets

These examples show what research has been saying all along. Regret usually does not come from spending money, but from spending it without purpose. If you save only out of fear, money does not protect you, it just traps you.

If you spend it carelessly, it leaves you feeling empty. But if you use it for experiences and relationships that truly matter, it gives life more meaning.

The psychology of spending teaches us that financial success is not just about building wealth. It is about using money in ways that create both security and fulfillment.

Research by Gilovich, Thaler, Dunn, Norton and Holmes all point to the same truth that happiness with money is never about the total you keep, but about whether it supports the life you want to live.

Source: Inquirer