The Big Mac index: Our interactive currency comparison tool

Post by IncRnd » Fri, Feb 04, 2022, 3:04 PM UTC

petercooper wrote: post #14

I 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%…

  Burgernomics was never intended as a precise gauge of currency misalignment,
  merely a tool to make exchange-rate theory more digestible. Yet the Big Mac
  index has become a global standard, included in several economic textbooks
  and the subject of dozens of academic studies. For those who take their fast
  food more seriously, we also calculate a gourmet version of the index.

Post by moffkalast » Fri, Feb 04, 2022, 3:07 PM UTC

SketchySeaBeast wrote: post #59

long_time_gone wrote: post #55

Earlier quoted context omitted.

It's not quite that simple. The US Big Mac [1] has 11% more calories than the Denmark Big Mac [2], which is an 11% difference. Also, the average hourly wage in the US is $31.63 [3] as of January 31st. [1] https://www.mcdonalds.com/us/en-us/product/big-mac.html [2] https://www.myfitnesspal.com/food/calories/mcdonalds-big-mac... [3] https://www.bls.gov/news.release/empsit.b.htm

> The US Big Mac [1] has 11% more calories than the Denmark Big Mac [2], which is an 11% difference. Sorry, could we get someone to check those numbers?

Post by gruez » Fri, Feb 04, 2022, 3:11 PM UTC

bryanrasmussen wrote: post #53

moffkalast wrote: post #20

Earlier quoted context omitted.

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…

>Usually cheap stuff like bread is notoriously expensive in Switzerland for example, maybe ingredient quality in some places might be legally mandated, increasing price (I know everyone gets the same, but not if the law says different) basically the thing I'm thinking of is an article about a year ago where some sort of white bread was declared legally not bread but a form of cake by some EU country - can't remember…

Post by odonnellryan » Fri, Feb 04, 2022, 3:12 PM UTC

nemo44x wrote: post #10

whoomp12342 wrote: post #5

The problem with the big mac index is that it assumes people still like mcdonalds.

Their stock and earnings would suggest they’re more popular than ever. Every time I drive past the one near me there’s a line of cars wrapped around it.

Post by gruez » Fri, Feb 04, 2022, 3:14 PM UTC

mym1990 wrote: post #30

moffkalast wrote: post #20

Earlier quoted context omitted.

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…