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The Big Mac index

A basket of sliders

Our flame-grilled guide to currencies suggests the dollar is getting dearer

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matt8268

I always love the Big Mac Index updates, but the onslaught of contrived puns basically made this article unreadable.

Jagerhunts

They forget to include the portion size. I know in some countries the portion size of a Big Mac is different than the US Big MAC. Perhaps a better measurement would be dollar per ounce or gram.

anthonymaw

Perhaps lost in this great article was the fact that in 1975 a Big Mac cost 65 cents in the United States, served up in those notorious now discontinued styrofoam clamshell containers. Put another way the purchasing power of the US dollar has declined 7 fold in 40 years.

Eivind Eklund

I believe you are comparing prices with and without sales tax. From having lived in Norway and living in the US, the Norwegian prices seems about right for standard quotes prices with 25% VAT (Value Added Tax, a form of sales tax) and the US prices for standard quoted prices without sales tax.

This still leaves a large difference - the Norwegian price is still 30% higher than in the US - but not quite as wide a gap as your article indicates.

From a quick graph based guess, and assuming you've done the same for Swiss prices, it also places Switzerland and Norway head to head in terms of "raw price" (without sales tax/VAT) - Switzerland has an 8% VAT.

j2zcpxMhdn

Please calculate the cost of a Big Mac when the $15.00
per hour wage is employed for MacDonald's workers.

mncontext

As a professional economist I have always liked this index. It is a good, down-to-earth comparison. However, with Eurozone it becomes tricky... I live in Sweden but have a girlfriend in Finland (so live there halftime). I am also for professional reasons a lot in Germany. Now, Finnish food prices seems higher than Swedish (and German). Almost anything in Finland seems more expensive than in Sweden. The Finns have more or less consciously a duopoly in food retail and do nothing about it. Germany on the other hand have intense competition. So treating the Eurozone as one may be a necessity for reasons of calculations but that part of the Big Mac index is, unfortunately, kind of useless. It would be interesting to see what a Big Mac costs in the individual countries, as well as the price of a food basket.
Mats

W6LJzbVM7g

I believe there is a little bug in your analysis. The index says that the Swiss Franc is less overvalued than in 2009. They also argument that this is due to the central bank intervention. This is only partly true as the central bank took action in 2011. The currency actually appreciated compared to 2009. The reason for a less overvaluation in local terms is that the price of a BIG MAC in the US increase from 3.5USD to 4.8USD. The US inflation is higher than the CCY appreciation.