The Economist introduced the Big Mac Index 27 years ago as a half-joking illustration of the purchasing power parity between currencies. The magazine has published the index annually ever since, providing us all with a test of how market exchange rates affect the value of goods in different nations.
Somewhere along the way it expanded the concept to include the amount of time the average worker would have to work to make enough dough to buy a Big Mac.
You could say the burger-based measurement makes the exchange-rate theory easier to digest.
“As Americans celebrate the Fourth of July with barbecues across the land, what better way to demonstrate how the US stacks up against the rest of the world?" asks Paulien Osse, Director of the WageIndicator Foundation, in a statement last week. "The hamburger, perhaps one of the most American of cuisines, definitely fits the bill – though, this is simply an index and I wouldn’t recommend consuming that many hamburgers at one time."
The average price of a Big Mac in the U.S. in early 2013 was $4.37, according to the index. In China, it was $2.57. That shows that the yuan was undervalued by 41 percent.
U.S. workers held a gross hourly wage of $24.50, the index continues. That means they could theoretically buy 4.1 Big Macs an hour (which we don't advise, but to each their own!). That beats the United Kingdom's 3.5 Big Macs an hour with their median gross hourly pay at $19.60.
To view results for other countries, visit The Economist's explainer page here.
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