Comments on: Buying power using Big Mac Index

Buying power using Big Mac Index

PetBoogaloo — Fri, 17 Nov 2006 09:24:11 -0800

The UBS Bank calculated how long it takes an average worker around the world to earn enough to buy a Big Mac. Workers in Tokyo were the fastest: Tokyo 10 minutes, New York 13 minutes, London 16 minutes, Hong Kong 17 minutes, Paris 21 minutes, Moscow 25 minutes, Rome 39 minutes, Beijing 44 minutes, Manila 81 minutes, Jakarta 86 minutes. Is this a fair comparison? Is it something that will change people's perspective about the rest of the world?

By: Kirth Gerson

Kirth Gerson — Fri, 17 Nov 2006 09:32:42 -0800

Don't overlook the fact that a Beijing Big Mac is a pale imitation of a NYC Big Mac.

By: champthom

champthom — Fri, 17 Nov 2006 09:34:02 -0800

Um, maybe it's because I haven't been to a McDonald's in a while but don't they tend to charge more for Big Macs where the cost of living is higher? For example, I think I paid something like $7 for a Big Mac at the Times Square McDonald's. Maybe it was so much because it was a touristy type of place but nonetheless, I'm guessing that a Big Mac in NYC, for instance, costs a bit more than in Anytown, USA. While it might take someone in New York City only 13 minutes to buy a Big Mac in Anytown, USA , it'll take them slightly more to buy it in New York City. Likewise, it'll take the Tokyo worker longer to buy that Big Mac in Tokyo, I'd imagine.

By: rhymer

rhymer — Fri, 17 Nov 2006 09:35:02 -0800

Although it's an interesting and clever index, it's very well known and has been around for decades.

By: mr_crash_davis

mr_crash_davis — Fri, 17 Nov 2006 09:36:33 -0800

On Mondays, it takes me about three minutes.

By: Paris Hilton

Paris Hilton — Fri, 17 Nov 2006 09:36:39 -0800

Yes, the "big mac index" has been around for a long time. This is not novel. I'd like to see an index of how much it costs to cook an equivilant meal.

By: Bugbread

Bugbread — Fri, 17 Nov 2006 09:37:10 -0800

I'm curious what professions they used when they say "The rating was based on the local price of the product divided by the weighted net hourly wage in 14 professions.". The Tokyo wage comes out to 2800 yen per hour ($24 an hour), and I certainly don't know of many people who make that much.

By: orthogonality

orthogonality — Fri, 17 Nov 2006 09:37:40 -0800

Now I'm hungry for trans-fat.

By: Mister_A

Mister_A — Fri, 17 Nov 2006 09:41:14 -0800

Really bugbread? That doesn't seem like all that much for someone in Tokyo (or NYC or SF...) It works out to about $50,000 US annually (based on a 40-hr week)

By: phirleh

phirleh — Fri, 17 Nov 2006 09:41:31 -0800

Not only can Tokyo earn it faster, they can consume it faster, preferably by dipping it in a glass of water.

By: Ufez Jones

Ufez Jones — Fri, 17 Nov 2006 09:41:36 -0800

Since '86. God bless The Economist.

By: Bugbread

Bugbread — Fri, 17 Nov 2006 09:43:35 -0800

champthom : "Um, maybe it's because I haven't been to a McDonald's in a while but don't they tend to charge more for Big Macs where the cost of living is higher?" From country to country, yes, but as far as I know, within a country it's all equal. A Big Mac in Tokyo costs 280 yen, and a Big Mac in the smallest godforsaken town way out in the country (er, which is big enough to have a McDonald's, of course) is also 280 yen. Plus, from what I gather, they're using the price per country to determine the purchasing power per country. So, for example, a country where people make $2 per hour and where Big Macs cost $1 would have the same purchasing power as a country where people make $8 per hour and Big Macs cost $4.

By: Bugbread

Bugbread — Fri, 17 Nov 2006 09:45:17 -0800

Mister_A : "It works out to about $50,000 US annually (based on a 40-hr week)" Exactly. I just don't know a lot of people who make that much. Maybe it's because of the age group of colleagues (mid-20s, early 30s), but I'd guess the annual income is much closer to around $30,000 or $40,000.

By: Hicksu

Hicksu — Fri, 17 Nov 2006 09:46:13 -0800

mmm.... big macs as currency...

By: PigAlien

PigAlien — Fri, 17 Nov 2006 09:48:13 -0800

Wow, there are lots of misconceptions here. What? Don't look at me... I don't have the answers!

By: adamvasco

adamvasco — Fri, 17 Nov 2006 09:50:33 -0800

The Economist has been doing this since 1986. March 06 hamburger standard.

By: dreamsign

dreamsign — Fri, 17 Nov 2006 09:51:38 -0800

New Delhi 59 I call Muggins. Ain't no Big Mac in New Delhi. Tis the majestic Maharajah Mac. (mutton)

By: adamvasco

adamvasco — Fri, 17 Nov 2006 09:56:38 -0800

Well done Mr Jones.

By: ODiV

ODiV — Fri, 17 Nov 2006 09:57:45 -0800

From country to country, yes, but as far as I know, within a country it's all equal. That's certainly not how it is in Canada.

By: nielm

nielm — Fri, 17 Nov 2006 09:59:31 -0800

I wish people would read the article before posting... The Economist's Big Mac Index compares the price of a Big Mac with the exchange rate This is slightly different: it compares the price of a Big Mag with the average wage... From the first paragraph with my ephasis:

The Economist has used the Big Mac as an index of purchasing power to compare the relative strength of currencies throughout the world at least since the 1980s. Now, UBS, the Swiss Bank, has conducted an in-depth survey of the relative purchasing power of workers from various cities around the world using the Big Mac as its index.

By: Bugbread

Bugbread — Fri, 17 Nov 2006 10:00:07 -0800

For all the people pointing out "The Economist has been using the Big Mac index since the 1980's", allow me to point out the first sentence of the FPP link:

"The Economist [1] has used the Big Mac as an index of purchasing power [2] to compare the relative strength of currencies throughout the world at least since the 1980s [3]"

By: Bugbread

Bugbread — Fri, 17 Nov 2006 10:00:58 -0800

Jinx! You owe me a coke, nielm! (But your point was better than mine anyway)

By: nkyad

nkyad — Fri, 17 Nov 2006 10:01:19 -0800

Is this a fair comparison? Except for the fact that it gets unrealistic as you move down the scale, McDonald's consistent pricing policy made this index possible a long time ago. It is a good measure for comparative purchasing power among different countries. I said "unrealistic" above fo a couple of reasons. First, there are some distortions. Take a look at this two entries: Sao Paulo, Brazil 38 [...8 cities...] Rio de Janeiro, Brazil 53 Well, I am Brazilian and I live in São Paulo. Rio is 400 Km from here. A Big Mac costs exactly the same in both cities. Wages are somewhat the same too. The cost of living in São Paulo is higher except for housig costs (rent and house purchase in Rio are far more expensive for a number of reasons). The second point that makes this unrealistic is that the farther down you go, the less a Big Mac can be seem as a common meal. In poorer countries you can usually eat far better for far less money in local restaurants, pub or pub equivalents and diners, so a Big Mac is a very occasional (sometimes special) choice.

By: weapons-grade pandemonium

weapons-grade pandemonium — Fri, 17 Nov 2006 10:04:39 -0800

But what they don't tell you is that because of those massive amounts of water and chemicals used to grow the grain to feed the cattle, it's more environmentally friendly and just as nutritious if you just eat the money.

By: gimonca

gimonca — Fri, 17 Nov 2006 10:10:05 -0800

How long does it take residents of each city to earn a month's prescription of Lipitor?

By: blue_beetle

blue_beetle — Fri, 17 Nov 2006 10:13:15 -0800

But how many Big Macs would I need to trade for a PS3? And how long would I have to wait in line while they were made?

By: Mister Bijou

Mister Bijou — Fri, 17 Nov 2006 10:14:00 -0800

rhymer writes: Although it's an interesting and clever index, it's very well known and has been around for decades. Beg to differ. . . the Economist magazine since 1986 has been using the price of a Big Mac as a way of tracking the relative purchasing power of different currencies. Most especially as a way to judge whether the US dollar is undervalued/overvalued against other currencies. This new, closet Marxist UBS study takes, however, the ubiquity of the Big Mac one step further -- as a means to establish the amount of socially necessary labour-time required by workers in different countries to make said purchase.

By: Lanark

Lanark — Fri, 17 Nov 2006 10:16:45 -0800

Madrid, Switzerland 19 How many mistakes are in this thing?

By: talldean

talldean — Fri, 17 Nov 2006 10:22:37 -0800

Bugbread, a Big Mac in the largest city in a country *certainly* costs more than one in podunk. In Manhattan, you're looking at $7 or so? Here in DC, I bought one the other day for $6, but that was the value meal. In Pittsburgh, I've paid much less. The prices are regional, methinks.

By: drezdn

drezdn — Fri, 17 Nov 2006 10:32:46 -0800

The prices can vary by location within an area.

By: CynicalKnight

CynicalKnight — Fri, 17 Nov 2006 10:35:41 -0800

So 1 McMinute is 13 regular minutes in NYC, etc. What's the average lifespan of the workers in these various regions, in McMinutes?

By: rkent

rkent — Fri, 17 Nov 2006 10:37:54 -0800

"But the disparities are huge: in Nairobi, 1½ hours' work is needed to buy the burger with the net hourly wage there. In the U.S. cities of Los Angeles, New York, Chicago and Miami, a maximum of 13 minutes' labour is needed." Now, dammit, there are no McDonald's in Nairobi, so where are they getting their burger price for that market? If it's all about purchasing power, I think using a foreign Big Mac price would defeat the whole point. Come to think of it, there is a little sandwich shop called "McDonna's" (seriously) in a kind of run-down part of town; wonder if they supplied the relevant burger.

By: rkent

rkent — Fri, 17 Nov 2006 10:39:42 -0800

bugbread: From country to country, yes, but as far as I know, within a country it's all equal. Also, have you ever been to an airport?

By: lordrunningclam

lordrunningclam — Fri, 17 Nov 2006 10:52:38 -0800

Regarding the cost of a Big Mac, when I go to McDonald's (rarely but not rarely enough) I get a fish sandwich. But, I can say the cost of a McDonald's fish sandwich can vary by about 35 cents between Tampa and St. Petersburg, St Pete being cheaper. I don't know how they set their pricing, but it definitely isn't constant over a country, or even over 10 miles.

By: spicynuts

spicynuts — Fri, 17 Nov 2006 10:54:06 -0800

Also, have you ever been to an airport? Seriously man, they may fuck you at the drivethrough but they RAPE you at the airport. And they don't use lube. RE: the 50K per annum, this quote from an August NY Times article indicates that most households in NYC earn a bit less than 50K: In New York City, median household income — the middle number on the scale — remained about the same since 2004, at $43,434. But the mean, or average, income rose, suggesting greater gains among the well-to-do. Manhattanites recorded the biggest income gains. About 5 percent of households in the city reported incomes of $200,000 or more; 13 percent reported making less than $10,000.

By: Bugbread

Bugbread — Fri, 17 Nov 2006 10:58:10 -0800

talldean : "Bugbread, a Big Mac in the largest city in a country *certainly* costs more than one in podunk." Apparently, then, it depends on what country "a country" is. Check out McDonald Japan's menu page. It's all in Japanese, so I'll point out that there is nowhere on the site to specify what city you're in. The prices are the exact same anywhere you go in Japan (except in US military bases, because they are operated separately, use US dollars instead of yen, etc.). So I've learned something (in some countries, there's a variation in price from city to city), and you've learned something (in some other countries, there is no variation in price from city to city).

By: liam

liam — Fri, 17 Nov 2006 11:07:16 -0800

This happy customer in an Indian McDonald's earned her beefless Big Mac in less than a nanosecond.

By: mr_crash_davis

mr_crash_davis — Fri, 17 Nov 2006 11:11:43 -0800

Seems to me that it's the franchise owners that set the prices, isn't it? Example: There are two McDonald's within about two miles of my house, owned by different franchisees. Prices at the one in the mall are invariably higher than the one in the older shopping district, which I would assume is due to higher costs associated with a mall location.

By: rob511

rob511 — Fri, 17 Nov 2006 11:11:49 -0800

In poorer countries you can usually eat far better for far less money in local restaurants... I submit subsisting on your own nail clippings and boogers (plus occasional navel lint for roughage) would be more nutritious.

By: Bugbread

Bugbread — Fri, 17 Nov 2006 11:30:05 -0800

mr_crash_davis : "Seems to me that it's the franchise owners that set the prices, isn't it?" Again, depends on the country. Every single McDonald's in Japan charges the exact same amount of money. They even have the prices on their website. Maybe Japan is the only country in the world where McDonald's works that way, but I'd be surprised. The rare minority situation, sure, but unique?

By: zeoslap

zeoslap — Fri, 17 Nov 2006 11:38:24 -0800

Here in San Francisco on Market St there are two McDonalds about two blocks from one another that have different prices, the one decked out like a Chevron Gas station is pricier than the other one that has a homeless guy opening the door with his cane for you.

By: nyxxxx

nyxxxx — Fri, 17 Nov 2006 11:45:20 -0800

How long with it take them to get the double cheesburger off the dollar menu? Cause that's what I'm gettin. Fancy shmancy foreigners with their big macs. They need to get a chicken sammich or an apple pie off the cheap menu. That's what real Americans do.

By: rhymer

rhymer — Fri, 17 Nov 2006 11:54:10 -0800

OK, OK. In future I'll try and read more than two lines before I comment.

By: spiderskull

spiderskull — Fri, 17 Nov 2006 12:15:20 -0800

Maybe now McDonald's can change their current advertising -- rather than refering to $1, they say "That's worth 12 Big Macs"; they can now change it to "That's worth 1.43 Jakartan man-hours"

By: Hal Mumkin

Hal Mumkin — Fri, 17 Nov 2006 12:45:47 -0800

bugbread, you should stop going to McD's and go to Freshness Burger instead.

By: Bugbread

Bugbread — Fri, 17 Nov 2006 12:59:56 -0800

Freshness is too expensive. I love their prosciutto sandwich, though. Wish they had it all year, instead of just seasonally.

By: nkyad

nkyad — Fri, 17 Nov 2006 13:53:10 -0800

"Every single McDonald's in Japan charges the exact same amount of money. They even have the prices on their website. Maybe Japan is the only country in the world where McDonald's works that way, but I'd be surprised. The rare minority situation, sure, but unique?" Just to support bugbread here. In Brazil the price is exactly the same in any McDonald's store (and Brazil is not Japan, sizewise. You can almost fit Japan in any one of our medium sized states). In São Paulo (largest city in the country) you can dial one central phone number and order for delivery, paying the same price no matter where you are and which store will eventually fulfill your order.

By: runkelfinker

runkelfinker — Fri, 17 Nov 2006 14:18:27 -0800

I love this list. I've been in the fortunate/tiring position of visiting five of these cities this week - two at the top (London, Vienna), and three at the bottom (Warsaw, Bratislava, Bucharest), but I resisted having a Big Mac in any of them...

By: wendell

wendell — Fri, 17 Nov 2006 14:21:33 -0800

I got your joke, mr_crash, $1 Big Mac Mondays! When the BM is normally about 20 cents less than an In-n-Out Double Double, it's the only excuse. Meanwhile the McRib is having its SECOND Farewell Tour (who in pop music was first to have multiple farewell tours?) and NOT coming to my area, probably to punish me personally for this (I WISH). Now answer me this fast food economic question: Why does Jack in the Box charge almost a buck more for their sandwiches on Ciabata rolls? It's good, but NOT THAT GOOD.

By: gyc

gyc — Fri, 17 Nov 2006 14:39:53 -0800

Maybe now McDonald's can change their current advertising -- rather than refering to $1, they say "That's worth 12 Big Macs" I thought that was a Wendy's commercial.

By: flapjax at midnite

flapjax at midnite — Fri, 17 Nov 2006 19:24:32 -0800

bugbread, you should stop going to McD's and go to Freshness Burger instead. Definitely. Freshness Burger is good. They serve real onion rings! And don't forget MOS Burger: the most natural ingredients used in any fast food restaurant in Japan (or probably anywhere). Oh, and Tokyo topping the list? YEAH! TOKYO NUMBER ONE! (This expat don't eat no Big Macs, though...)

By: mr_crash_davis

mr_crash_davis — Fri, 17 Nov 2006 19:30:28 -0800

"How long with it take them to get the double cheesburger off the dollar menu? Cause that's what I'm gettin" Me too, except when I'm in Tempe, 'cause the McDonald's down the road from the Improv has the Big'N'Tasty on the dollar menu, and that's the awesomest goddamn $1 hamburger on the planet.

By: infini

infini — Sat, 18 Nov 2006 00:37:48 -0800

the study seems to indicate the return on investment {ROI} in terms that share a common frame of reference just like PPP {purchasing power parity} which in itself, if I'm not mistaken, is based on the price of a Big Mac in each country. Cool.

By: dreamsign

dreamsign — Sat, 18 Nov 2006 10:21:34 -0800

And don't forget MOS Burger MOS Burger is excellent but I'm not sure I can even consider it fast food. Almost missed an inter-city bus because I didn't give them a full half hour to make my meal.