Burgernomics: The Big Mac index

The Economist recently published their popular “Big Mac Index,” a semi-annual “lighthearted guide to valuing currencies” that “is based on the theory of purchasing-power parity (PPP), which says that exchange rates should equalise the price of a basket of goods in each country.” The single baseline product for comparison is McDonald’s Big Mac which can be found in locations all over the world. Theoretically, as GOOD points out, this iconic fast food burger “cost the same everywhere because it has the same ingredients worldwide,” except for the price thus providing a useful snapshot of the global economic condition.

A Big Mac in the US currently costs $3.57, while the equivalent in China is $1.83 and on the over-valued end of the spectrum, this burger will set you back 40 kroner or $6.15 in Norway.