The Big Mac Index

The Economist publishes a Big Mac index, essentially a compilation of what a Big Mac costs in other countries. If classical economic theory is correct, this should allow people, among other things, to calculate exchange rates. For instance, if a Big Mac costs $3 in the U.S. and 2€ in France, then the exchange rate should be $1.50 to the Euro. This is called Purchase Price Parity.

What the Economist couldn’t have known was that although my cheeseburger meal in Switzerland cost $12, it was the most delicious thing I’ve ever eaten in a McDonald’s. And the Royal with Cheese meal that I just had in Zagreb, while only costing $6, looked and tasted like I had scraped it off the bottom of my foot. So, not all hamburgers are created equal. Something to think about, Economist.