The Economist has come out with an alternative Big Mac Index. The original Big Mac Index was introduced in Economist by Paul Woodall as an illustration to the concept of purchasing power. Big Mac Index converts the amount needed in the local currency of a country to purchase a Big Mac at McDonalds into US Dollars. An index of these values gives us an idea about the purchasing power of US Dollars in that country. Some of the countries with the highest BMI are Norway, Switzerland, Denmark and Sweden(Is it a coincidence that three out of four of these countries have a very high standard of living with high taxation and welfare policies.) The countries with the lowest BMI are the South East Asian nations like Malaysia, Hong Kong(technically not a nation), Thailand etc.
The new BMI calculates the time it takes a person to earn enough to purchase a Big Mac. Chicago, Tokyo and Toronto are the dream destinations for fast food enthusiasts where it takes a person roughly 10 minutes to earn a Big Mac. On the other end of spectrum is Nairobi, a person has to work for three hours before he can have hi Big Mac. Aamchi Mumbai fares not much better. There you will earn your burger with 70 minutes of hard work done.
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Hey buddy ... are u tryin to each everyone Economics ....?? :P
ReplyDeletenice man nice! u know something? you've just inspired me to start my own blog...it was always a plan and it remained a plan...er..it still is a plan but it feels like it wont be a plan anymore..when i do i'll thank you for it! enlightening post btw.
ReplyDelete@Aditya - I should know something about Econ to teach it to somebody. I plead not guilty to that charge.
ReplyDelete@Tomtsa - Thanks yaar.Keep up the spirit.
Some flaw there, isnt it? Big Mac can be priced at a lesser margin in various countries, depending on that particular countries situations & McD's policy... 8)
ReplyDeletenice blogging attempt btw..
@Sugandha - Firstly, thanks for stopping by. I am honored by the fact that someone who has actually studied econ commented on my blog :).
ReplyDeleteAgree with your point in principle. But don't you think that the margin on Big Mac would essentially be low. So, the effect of pricing strategy of McD would not distort the PPP too much. I mean 10 cents off 4 dollars is just 2.5%. So the PPP would be wrong by 2.5% on an average.
Doing engineering doesnt make one a Bill Gates or Larry Page, right? Similarly, please dont consider me an eco champ i m just a BA in Economics :)
ReplyDeleteNyway small difference there you right, but still ... Happy blogging again!