Burgernomics

What is the universal commodity, something you can buy in every corner of the globe and expect it to be the same? A shovel? Orange juice? A pair of socks? According to The Economist, the answer is McDonald’s Big Mac. Since the franchise has penetrated all the major economies of the world, you can expect to be able to find a Big Mac in any city you travel to on Earth.

Thus, the Big Mac Index is a useful indicator of the health of various economies. By tracking the price of Big Macs in dozens of locales, The Economist is able to follow trends in inflation, food prices and economic health.

For instance, in the U.S., a Big Mac costs approximately $3.41 with tax in a major city. In Hong Kong, you can get the same burger for the equivalent of $1.54, while in Switzerland it would cost you $5.20. Is this information at all useful? Burgernomics says yes:

purchasing-power parity is the notion that a dollar should buy the same amount in all countries, using an identical basket of goods – in this case, a McDonald’s Big Mac. Comparing actual exchange rates with PPPs indicates whether a currency is under- or overvalued.

You can sound smart and funny referring to Burgernomics at your next backyard grill party. Although some, like me, will wonder if anything you buy at McDonald’s is worth the pain of actually having to eat it.

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