Amusing that Russia has the world's cheapest Big Mac. Sorry Lenin, old chap.
Purchasing power parity is powerful tool. China manipulated exchange rate for years.
The Big Mac index: Our interactive currency comparison tool
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Re: The Big Mac index: Our interactive currency comparison tool
#22It's maybe 20% more expensive in Switzerland but it tastes better.
US vs UK McDonald's comparison - https://www.youtube.com/watch?v=ZMaW6TamNAc
The differences in the ingredients lists are hilarious (oh and the portion size difference for the drinks).
Re: The Big Mac index: Our interactive currency comparison tool
#23I for one am shocked a Big Mac costs $5.81 in the United States. It's been too long I guess but I remember the meals going for $5-6 when I was a kid. And that's national average too, not an expensive metro area. Surely there were advances in production and logistics that would have lowered the "real" cost of McDonalds delivering a Big Mac, so all else being equal we would expect the price to drop over time. But monet…
> Surely there were advances in production and logistics that would have lowered the "real" cost of McDonalds delivering a Big Mac, so all else being equal we would expect the price to drop over time. For that, you should look at number of minutes (or hours) the average person needs to work to afford a local Big Mac. Wikipedia's entry on the Big Mac index says that https://web.archive.org/web/20080216015122/http://ww…
I meant more on the production side. Like how much labor and raw material is required to make a Big Mac.
But I guess if you consider the price relative to typical wages then it should give you a similar effect, although it would ignore the advancements in capital productivity which may not be reflected in wage data.
Re: The Big Mac index: Our interactive currency comparison tool
#24I like that other "Big Mac index" where they compare how long an employee has to work at McDonald's in different countries to buy a Big Mac there; that at least give you some idea of which economy you'd want to live in.
Re: The Big Mac index: Our interactive currency comparison tool
#25The problem with the big mac index is that it assumes people still like mcdonalds.
Snide comment, but still a good point. I assume that Macdonald's prices based on perceived value. If you go to Asia, McD’s has a much higher perceived value - and McD’s knows this and does multiple product launches every year, often catering to local tastes. So I’d assume that consumers in the US or Europe don’t value a Big Mac the same was they do in Asia and as such the pricing differ (i.e. they can price higher in…
From having eaten at McD's in Sweden and Korea I'd say the Korean McD's is miles beyond the Swedish one in every way, including tasting better and also being cheaper. In Sweden I would never eat there unless I really had no other option, whereas I don't mind eating McDonald's in Korea.
Re: The Big Mac index: Our interactive currency comparison tool
#26The problem with the big mac index is that it assumes people still like mcdonalds.
https://finance.yahoo.com/quote/MCD/key-statistics?p=MCD
Annual revenue: $23.22B Profit margin: 32.49%
And that's ignoring the fact that a lot of the revenue and profit go to franchisees, and never make it to the corporate level to be reflected in those numbers.
There's no assumption necessary. Clearly a whole lot of people still like McDonald's.
Re: The Big Mac index: Our interactive currency comparison tool
#27Thought it was going to be this one, which I enjoy using a lot and find useful for getting the big picture.
https://inflationchart.com/cpi-in-bigmac
https://inflationchart.com/spx-in-bigmac
In the 70s you could work minimum wage for an hour and afford three Big Macs. Now you have to work almost an hour to afford one Big Mac.:
Re: The Big Mac index: Our interactive currency comparison tool
#28The big mac index is flawed in so many ways.
Labour and tax components of the costs are wildly different in countries. Raw materials might be almost irrelevant in some places. Because of this, the quality of the dining experiences are wildly different, because each restaurant owner needs to justify their costs. Add to this the effect of competition, which itself depends on local markets.
Re: The Big Mac index: Our interactive currency comparison tool
#29I like that other "Big Mac index" where they compare how long an employee has to work at McDonald's in different countries to buy a Big Mac there; that at least give you some idea of which economy you'd want to live in.
can you provide us a link?
Re: The Big Mac index: Our interactive currency comparison tool
#30I don't see how this really works any more because a Big Mac is different in different countries. It's not an "identical" product being compared. You can use McDonald's own local nutrition calculators to confirm this. A Big Mac in the US is 550 calories, yet 508 calories in the UK (522 in Russia and a mere 498 in Switzerland, for comparison). Is it factored into the index that British fast food fans are getting 7.6%…
I think there's more to consider here too that makes it irrelevant in terms of currency comparison. Usually cheap stuff like bread is notoriously expensive in Switzerland for example, I'd assume because the price of labour is that high. As such the cost of making a big mac there is also more expensive, buying power is higher, so to meet demand and recoup labour costs the end prices are higher. Same for the other extr…
It isn't about converting currency as much as a hypothetical arbitrage play in the difference between exchange rates and actual prices. If I took a bunch of dollars to Turkey, converted them, bought an obscene amount of Big Macs, brought them back to the US, and resold them, there would be a lot of money to be made due to the value gap. Obviously ignore the fact that Big Macs are perishable goods(arguable?) and that there isn't a decent market for second hand burgers...but this would work for other goods imported into the US.