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The Big Mac index: Our interactive currency comparison tool

• joshspankit 5y ago
  In addition to other’s great points, this is skewed because there are countries where the Big Mac’s cost is highly subsidized by government (such as in the US with dairy and beef.) > The U.S government spends $38 billion each year to subsidize the meat and dairy industries, but only 0.04 percent of that (i.e., $17 million) each year to subsidize fruits and vegetables. A $5 Big Mac would cost $13 if the retail price included hidden expenses that meat producers offload onto society. - https://scet.berkeley.edu/wp-content/uploads/CopyofFINALSavingThePlanetSustainableMeatAlternatives.pdf https://scet.berkeley.edu/wp-content/uploads/CopyofFINALSavi...
• probably_wrong 5y ago
  I used this index two days ago: my siblings and I want to buy a present as a group, but we are split across multiple countries and it wasn't clear how to make a fair split. We ended up agreeing that everyone would contribute their local equivalent of ~7.3 Big Macs. The only minor correction needed was that the index lists the official dollar exchange price for some currencies while the real price is not even close to that, but that's not the index fault.
  • jb1991 5y ago
    I did this once as well. I felt a bit guilty because my friend paid the amount of Apple's largest Mac, and I never told him the mistake.
    • 6LLvveMx2koXfwn 5y ago
      If they were rich enough not to query the error then everybody won.
      • bil7 5y ago
        classic hacker news moment: intelligent, wholesome reply to a joke.
        • kingcharles 5y ago
          Also: whooosh.
  • throw3838 5y ago
    Not completely fair . In some countries Mcdonald is expensive hipster place (Japan, central europe).
    • detaro 5y ago
      Where in Europe is McDonalds a "hipster place"?
      • yokoprime 5y ago
        Apparently "central europe". In western and northern europe its certainly not a hipster placer.
        • mns 5y ago
          McDonalds is not even a hipster place in Eastern Europe, it's just the most popular fast food chain, but that's about it.
        • jaclaz 5y ago
          Also southern europe (Italy) MacDonalds are just fast foods, nothing more than a cheap place to get something to eat quick (and very used by families with children that usually love the periodical gadgets).
        • 988747 5y ago
          I remember that when I was attending primary school in Central Europe, a stop at McDonald's was the most anticipated moment of every school trip. That was 25+ years ago though, and we were kids...
        • detaro 5y ago
          And it isnt in any of the places of what one might call "central europe" I'm familiar with, thus the question for details.
    • StartupMemoryLn 5y ago
      Same in Central America.
• throwaway22032 5y ago
  Amusing that Russia has the world's cheapest Big Mac. Sorry Lenin, old chap.
  • siva7 5y ago
    It tastes the same as in US
    • throwaway22032 5y ago
      Возможно лучше чем в Англии. Or maybe I'm just used to the local one so all of the foreign big macs taste novel and interesting.
    • sedan_baklazhan 5y ago
      A bit better in Russia, I would say. (difference could be caused by local food suppliers).
  • crypthrow 5y ago
    Purchasing power parity is powerful tool. China manipulated exchange rate for years.
  • amai 5y ago
    The Russians don't like eating at McDonalds in general. Many consider it as unpatriotic. So the low price simply reflects the low demand.
• bko 5y ago
  I 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 monetary inflation makes up for it and then some.
  • throwaway22032 5y ago
    I think the index is skewed by the fact that the offers work differently in different countries. In France the sandwich isn't much cheaper than the meal. The last time I was in Russia (lowest price on the chart) as I recall there's not as much of a saving for buying the meal.
  • MyHypatia 5y ago
    Yes, I am surprised too. Especially when an In-n-Out Double Double costs $4.20 (this is in expensive California) and their burger has more meat. Plus In-n-out is notoriously generous with worker pay and benefits ($14 - $38 per hour, 401k benefits, health benefits, and paid holidays and vacation). I guess for McDonald's that extra money goes to advertising and executive pay?
  • eru 5y ago
    > 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://www.ubs.com/1/ShowMedia/ubs_ch/wealth_mgmt_ch?contentId=103982&name=eng.pdf https://web.archive.org/web/20080216015122/http://www.ubs.co... should provide this information. Or see https://www.statista.com/statistics/275235/big-mac-worldwide-cities-working-time/ https://www.statista.com/statistics/275235/big-mac-worldwide...
    • bko 5y ago
• whoomp12342 5y ago
  The problem with the big mac index is that it assumes people still like mcdonalds.
  • nemo44x 5y ago
    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.
    • mgkimsal 5y ago
      Are they not letting people inside? a couple around me still seem to be 'drive through only', which accounts for 'line of cars' I see, which... just seems like it's people sitting around wasting more gas idling. Maybe some McDonalds will convert to a 'drive-in' style, like sonic, with food runners...
      • eru 5y ago
        Where I live, there was a brief period in 2020 when they didn't let people inside McDonald's, but otherwise they have always allowed dine-in. (However, I live in Singapore.)
        • dripton 5y ago
          Some fast-food places in the US went drive-through-only in 2020 and are still that way. I think if you're in the kind of rural or suburban place where almost everyone drives almost everywhere, then the drive-through does the majority of fast food business anyway, and many people who would have gone inside will switch to the drive-through rather than not buying your food, so the cost savings from not having to hire more staff to maintain the dining room might make up for the lost sales. Obviously in an urban area that gets a lot of foot traffic, this would not be the case.
          • mgkimsal 5y ago
            Some of the places around me are 'dine-in sometimes', which is maddening, as I can't tell until I go to the door if it's locked or not. So... I've quite going to those places. I don't care to sit idling my car for 3-5 minutes in a long queue.
• petercooper 5y ago
  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% less burger as well as paying more than a US consumer?
  • moffkalast 5y ago
    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 extreme example in Turkey where workers are dirt cheap, and as such don't have much buying power or contribute that much to the overall burger cost, so the price is effectively lower. This is just another standards of living map, it has barely anything to do with currency conversion. The Lira isn't undervalued, it's in a hyperinflation nosedive because of gross monetary mismanagement of Turkey lol.
    • mym1990 5y ago
      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.
      • moffkalast 5y ago
        Yeah theoretically, except customs tend to nullify that exact arbitrage profit. If anything you'd have a major loss. Could work for inside the EU I guess though, between those that don't use the Euro and those that do.
• aphroz 5y ago
  It's maybe 20% more expensive in Switzerland but it tastes better.
  • jstx1 5y ago
    US vs UK McDonald's comparison - https://www.youtube.com/watch?v=ZMaW6TamNAc https://www.youtube.com/watch?v=ZMaW6TamNAc The differences in the ingredients lists are hilarious (oh and the portion size difference for the drinks).
    • pessimizer 5y ago
      The calorie difference wasn't as bad as I was expecting. I always forget, because the UK is always making fun of the US for being fat, that they're the fattest people in Europe (well, they trade the title back and forth with the Greeks.)
    • muh_gradle 5y ago
      Wow this was insane. Having lived in both the UK and US, I always felt that there was a difference in portion size. But it's pretty bonkers to see the comparison before me like this.
• bjarneh 5y ago
  I 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.
  • em3rgent0rdr 5y ago
    can you provide us a link?
    • erwincoumans 5y ago
      https://www.economist.com/news/2009/08/20/an-alternative-big-mac-index https://www.economist.com/news/2009/08/20/an-alternative-big... or without paywall https://www.labnol.org/internet/big-mac-price-index/9721/ https://www.labnol.org/internet/big-mac-price-index/9721/
• JohnJamesRambo 5y ago
  Thought 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/cpi-in-bigmac https://inflationchart.com/spx-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.: https://inflationchart.com/minwage-in-bigmac https://inflationchart.com/minwage-in-bigmac
  • adventured 5y ago
    What percentage of the labor force earned the minimum wage in the 1970s versus today? Today it's less than 1%. More realistically the new minimum wage in the US is ~$13-$15 per hour, which you can earn from Walmart, Target, Amazon, Walgreens, CVS, Best Buy and most of the rest. They can't get enough labor and will hire almost anyone that walks in the door. These days you can trivially earn $13-$15 / hour to start, working at popular convenience stores like Sheetz, Wawa and numerous others like them. Skills required? The ability to talk to people normally, show up to work and scan bar codes.
    • legitster 5y ago
      It's worth pointing out that lots of countries don't even have minimum wage laws. It doesn't mean people there make $0 an hour.
      • odonnellryan 5y ago
        Those countries are either very strong union countries or countries that have lower standards of living.
        • didgeoridoo 5y ago
          Or have very high labor productivity and a constrained labor supply. Switzerland comes to mind.
• yobbo 5y ago
  The 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.
  • zeckalpha 5y ago
    That’s the point. The PPP index is also flawed in many ways. This shows the limitations of any such index more clearly.
    • mohanmcgeek 5y ago
      Why is the PPP index flawed?
      • zeckalpha 5y ago
        > Labour and tax components of the costs are wildly different in countries. Raw materials might be almost irrelevant in some places.
        • mohanmcgeek 5y ago
          PPP calculations include tax and Labour cost. Not just raw materials.
• genericacct 5y ago
  I was thinking about the index a few days ago, I'd like to see what it looks like using the price of aspirin instead of a burger.
  • TremendousJudge 5y ago
    The thing about the big mac is that it's that the ingredients are locally sourced -- local beef, bread, vegetables, and workforce. Not so much with Aspirin, or many other "universal" products
  • danuker 5y ago
    Here is the most specific I could find: "non-prescription drugs": https://www.statista.com/statistics/187253/us-consumer-price-index-for-prescription-drugs-from-1960/ https://www.statista.com/statistics/187253/us-consumer-price...
• mohanmcgeek 5y ago
  The original idea used to be that you could use the price of big Mac instead of comparing every aspect of consumer spend to calculate PPP. But clearly that isn't working anymore. Indian PPP rate which tech companies use to adjust pay is around 17-20 INR/USD. But this chart implies that the number is close to 35 INR/USD The numbers from numbeo which uses all the aspects of consumer spend gets a ratio closer to the one used by tech companies Maybe the original criticism of big Mac index still stands: there are cheaper burgers in other countries and they should be comparing against that.
  • intrasight 5y ago
    They didn't choose "burgers" - they choose something that's largely the same across the world. A Big Mac was what they choose. It's certainly not intended as a policy tool or a pay adjustment tool. But it is an interesting metric non the less.
    • eertami 5y ago
      I think the biggest flaw is that the Big Mac you are served in Switzerland is not really the same Big Mac you are served in the US. It's a cute form of comparison but indeed should not be used as a policy tool.
      • chucksta 5y ago
        I actually eat McD's specifically at least once while traveling internationally to see how much it changes. Anecdotal but its been my experience the core items taste and appear strikingly similar everywhere, and that's ~10 data points across the world.
        • samatman 5y ago
          Did you happen to sample Japan? I ask because I didn't get around to it; there's just too much good food in Japan and I wasn't there long enough. But I did have a Wendy's burger, and I can tell you: it's not the same burger you get in the States. It's much better. For a given ingredient, it will be inadequate in the US, in Japan, they are all food, like you might get from a bistro. That made me curious about McDs, but not curious enough to blow an entire precious meal on it.
• neilwilson 5y ago
  "In 2019, there was an estimated $1,650 trillion in foreign exchange market activity (Bank for International Settlements 2019, p.3).6 In that same year, world trade in goods and services was $24.96 trillion (World Trade Organization 2020, p.17). This is 1.5% of total currency market activity. Even allowing for multiple covering transactions by various parties and multiplying this by a factor of five, it still yields a total of only $124.8 trillion, or 7.5% of total foreign exchange volume. If we assumed that the appropriate factor were ten, which seems very unlikely, this does not help markedly as it only gets us to 15% of the market. In other words, purchasing power parity is an explanation of currency prices that is based on something in the range of 1.5% to 15% of actual foreign exchange market activity. Even supporters of purchasing power parity admit that it only holds in the long run – a period of time they say is equivalent to years or even decades. The more likely answer is that it does not hold at all. Because the factors that determine the demand for goods and services differ significantly from those that drive financial capital flows, purchasing power parity cannot possibly explain real-world currency movements." Harvey, John. (2021). Modern Monetary Theory, the United Kingdom, and Pound Sterling. https://www.researchgate.net/publication/351764940_Modern_Monetary_Theory_the_United_Kingdom_and_Pound_Sterling https://www.researchgate.net/publication/351764940_Modern_Mo...
• Jarlakxen 5y ago
  In Argentina one of the biggest issues with this Index is that if they use the official exchange I may look like that the Peso is way stronger than what actually it is. We have a lot of restrictions that prohibit Argentinian's from getting Dollars a that exchange ( only 200 USD a months ). It should be more fair to use the "Dollar Libre" (kind of dollars of the black market) as the exchange rate, which is double the official.
  • labcomputer 5y ago
    Actually, the biggest issue with the Big Mac Index in Argentina, is that the government tried to regulate the price of Big Macs specifically to manipulate the index!
• digitcatphd 5y ago
  I think the moral of the story is I need to go to Russia and get a Big Mac
  • Zenst 5y ago
    I remember the news of the time when they opened the first McDonalds in Russia and thanks to youtube, you can relive that moment and also appreciate back then, what was cheap for us, was not so in Russia, but yet they still came. https://www.youtube.com/watch?v=ckbfS99N6jY https://www.youtube.com/watch?v=ckbfS99N6jY
• throwaway4good 5y ago
  Something crazy is going on - compare 2022 with 2012. I remember going to the US and thinking it was cheap.
  • sgt 5y ago
    Last time I was in the US was in 2014, and I recall it was pretty cheap to eat out. Not surprised if costs went up drastically since then. I travelled from South Africa to Chattanogga to have my very first American BigMac, and it was delicious! I was probably just very hungry, though. ;-)
• kingcharles 5y ago
  My Qatari girlfriend to me the other day: "I just found out you can get a Big Mac with BEEF in it! What sort of weird shit is that?" All she has ever eaten: https://www.mcdonalds.com/qa/en-qa/product/chicken-mac.html https://www.mcdonalds.com/qa/en-qa/product/chicken-mac.html
  • Tsiklon 5y ago
    I was in McDonald’s yesterday in the UK and saw this was a product here now. I thought it was a new product hah, I hadn’t even considered it would be more readily available elsewhere
• dghughes 5y ago
  In Canada we'd have to convert Big Mac to the cost of how many Tim's double-doubles for it to make sense.
• forinti 5y ago
  One caveat about this index is that is does not consider the fact that Macdonald's has different types of customers in different countries. In rich countries, it targets lower income strata. In the third world, it targets middle and upper middle class. You can get much cheaper local food (and probably more nutritious food) on the streets. Therefore, Macdonald's is relatively more expensive in poorer countries.
  • Cthulhu_ 5y ago
    > In rich countries, it targets lower income strata. [citation needed]; anecdotal, I live in a rich country, a trip to McD's for a family of 3 quickly adds up to €25; home cooked dinner is < €10. I will acknowledge that the ability to cook food at home and having access to a supermarket that actually stocks fresh vegetables and the like is a rich country's privilege. That said, I gathered there's plenty of places in the US where that is simply not a thing.
    • inerte 5y ago
      Anecdotally that's the case in Brazil. McD is a lower-middle class and up place. McD in Brazil is actually not that bad in terms of quality. It doesn't have the bad rep it has in the US.
    • lukas099 5y ago
      Where I live, McDonald's is indeed more expensive than a home-cooked dinner, but it still targets the lower income strata.
    • danans 5y ago
      > I live in a rich country, a trip to McD's for a family of 3 quickly adds up to €25 That's pretty cheap for a rich country (i.e. the US or UK), especially when you consider the labor/time saved when you don't cook. Also, most people who fall in the lower income strata don't eat out every day, so $25/€25 for an occasional McDonalds meal for 3 is pretty achievable. The upper middle class in rich countries easily pay 2-3 times that price per restaurant meal.
    • 5y ago
• pdenton 5y ago
  Is the article hard to read for anyone else? The font looks terrible with jaggies everywhere. After removing "Charter" from the variable "--ds-type-system-serif" on :root, the page became legible. FF96 on void.
  • tasha0663 5y ago
    Looks fine on my crappy Android phone
• amai 5y ago
  "This suggests the rouble is 52.1% undervalued." It could also suggest Russian people don't like Big Macs as much as US Americans do, which I can confirm. A price reflects not only exchange rates but also supply and demand.
• tasha0663 5y ago
  So many comments here miss the tone with which The Economist presents this. It encapsulates some intriguing truth about the HN commentariat that the disclaimers are so willfully ignored. > The Big Mac index was invented by The Economist in 1986 as a lighthearted guide... > Burgernomics was never intended as a precise gauge of currency misalignment, merely a tool to make exchange-rate theory more digestible. And before you go and dissect the last sentence as E claiming it has actual use, stop and look both ways for puns.
  • debo_ 5y ago
    I really like puns. This seems to be the only place I post where I need to add /s or some other indicator to avoid literal interpretations of what I wrote.
• arcticbull 5y ago
  I'm curious how the Hong Kong Dollar can be "undervalued" with respect to the US Dollar by 51.4% when it's pegged 1:7.8 PPP doesn't really mean that a currency is 'undervalued' or 'overvalued' with respect to one another, just that local efficiencies or inefficiencies make procurement of a basket of goods relatively more or less expensive there relative to tradeable goods no?
  • aidenn0 5y ago
    In general island areas will show an "undervalue" for PPP measures. Hawaii Big Macs are more expensive than Indiana big macs, but that doesn't mean that Hawaiian USD are undervalued to Indiana USD.
    • arcticbull 5y ago
      I think there is an argument to be made for regional PPP adjustment. SF USD are definitely worth far less than Mississippi USD.
• excalibur 5y ago
  Is it really the case that nearly every other currency is undervalued? Seems much more plausible that USD is overvalued
• echopurity 5y ago
• neonate 5y ago
  https://archive.is/UX9Ln https://archive.is/UX9Ln
• benbristow 5y ago
  In the UK the ongoing meme is the price of a Freddo - a small frog shaped piece of milk chocolate by Cadbury's. When I was a kid they were 10p (0.14$), now they're around the 26p (0.35$) mark. https://www.vouchercloud.com/resources/the-freddo-index https://www.vouchercloud.com/resources/the-freddo-index
• whatgoodisaroad 5y ago
  Is this not more of a measure of beef related farm subsidies?
• nojs 5y ago
  McDonald’s positions itself very differently in different countries and the quality of Big Macs varies a lot. In some places McDonald’s is pretty good, and in others it’s really bad. You’re not comparing the same thing.
• RickJWagner 5y ago
  Flawed data. Big Macs are currently 2 for $6 at my local store. Woohoo!
• sgerenser 5y ago
  It says a Big Mac in the U.S. is $5.81 which sounded high. Popped open the McDonalds app and sure enough I can get one for $4.39 plus a free medium fry. Prices must not be uniform across the U.S., but I find it hard to believe the average is $5.81.
  • eulers_secret 5y ago
    So I thought this was interesting and looked into it. The website has a reference for where they get their big mac prices: > Big Mac Index measures the average price of a Big Mac at McDonald's in the United States and is famously used in the Economist's Big Mac Index to measure inflation. And a link to the Economist article (https://www.economist.com/big-mac-index https://www.economist.com/big-mac-index) where they further link to their methodology: https://github.com/TheEconomist/big-mac-data https://github.com/TheEconomist/big-mac-data The USA average seemed high to me, and I found this resource: https://www.zippia.com/advice/how-much-big-mac-costs-states/ https://www.zippia.com/advice/how-much-big-mac-costs-states/ - Nov 2021 - which suggests $4.40. But the Economists data/csv file really does say $5.81 for the USA... so that's where I bow out!
    • peteradio 5y ago
      Probably the csv did not support comments or else you'd have seen #todo get actual prices
• ljm 5y ago
  If you take the chart in the article at face value, where USD is the base currency and almost every other currency is undervalued in comparison... doesn't that mean that USD is overvalued in those terms? Or that USD derives its value from other currencies depending on it? If you calculated an equilibrium of sorts then USD would be worth less. And you'd have to separate the currencies that are based on USD as the standard and not gold or some other resource... right?
  • pc2g4d 5y ago
    The USD is relatively overvalued due to the geopolitical position of the United States, the petrodollar system, etc. By being the "reserve currency" it has built-in additional demand beyond what would be expected. This strengthens the dollar and weakens others by comparison, leading to the persistent trade deficits the U.S. suffers with many other economies, lack of competitiveness of U.S. exports, etc. At least, that's my understanding.