Nearest broker: Searching for a broker nearby…
Nearest broker: Tweed Phone: (613) 478-2532 Sunderland Phone: (705) 357-3916 Sudbury Phone: (705) 523-2030 Penetanguishene Phone: (705) 549-7437 Ottawa Phone: (613) 733-3312 Parry Sound Phone: (705) 746-2441 Orillia Phone: (705) 325-4234 Kemptville Phone: (613) 258-5991 Eganville Phone: (800) 884-1045 Petawawa Phone: (613) 687-4805 Belleville Phone: (800) 361-0941 Winchester Phone: (800) 487-3706 Wellington Phone: (613) 399-3620 Trenton Phone: (877) 455-0299 Prescott Phone: (877) 504-3569 Picton Phone: (888) 475-2776 Peterborough Phone: (800) 958 2270 Perth Phone: (877) 248-1222 Pembroke Phone: (877) 399-3299 Oshawa Phone: (800) 887-7309 North Bay Phone: (705) 475-0001 Napanee Phone: (613) 354-2152 Morrisburg Phone: (800) 806-0746 Midland Phone: (888) 737-6465 Madoc Phone: (613) 473-5266 Kingston Phone: (800) 590-5422 Gananoque Phone: (800) 932-2131 Embrun Phone: (866) 853-4740 Cornwall Phone: (844) 463-3616 Cobourg Phone: (800) 895-5902 Carleton Place Phone: (888) 237-9517 Brockville Phone: (888) 345-8663 Brighton Phone: (613) 475-1430 Barry’s Bay Phone: (866) 845-2123 Barrie Phone: (705) 726-3350 Bancroft Phone: (800) 994-0036 Arnprior Phone: (800) 668-7337
Get a Quote
Open Menu
Big Mac chart

The Big Mac Index

You know how it goes…two all beef patties, special sauce, lettuce, cheese, on a sesame seed bun. That jingle hit the air waves in the mid 70’s and carried on for more than a decade, making it one of the best advertising campaigns for the food chain and making this burger the best seller for McDonald’s. Today, Big Macs are sold in more than 100 countries, spurring The Big Mac Index.

In essence, the index answers the question ‘how much is a Big Mac in Japan?’

Something that started out as a lighthearted guide to measure whether currencies were at their correct level has turned into a global industry standard. Introduced in 1986 in The Economist by Pam Woodall, this index is now published annually, referred to by statisticians and has been included in several economics textbooks. Giving rise to the word burgernomics, the index is sort of an easy way to gauge currency and spending power in other countries.

According to the magazine, “it is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalize the prices of an identical basket of goods and services (in this case, a burger) in any two countries.”

For example, in Canada, on average, you can get a Big Mac for $5.64 ($5.52 US) compared to our neighbours to the south who can buy the same Big Mac for $4.80 in their own dollars. At the high end of the spectrum (again, in US dollars) in Norway you pay $7.76 and at the low end, in the Ukraine $1.63. Updated annually, the index gives real time comparisons and “this adjusted index addresses the criticism that you would expect average burger process to be cheaper in poor countries than in rich ones because labour costs are lower.”

The Big Mac Index – now available in an interactive currency-comparison tool.

This tool measures the exchange rate between two countries, according to The Economist, ‘by dividing the price of a Big Mac in one country (in its currency) by the price of a Big Mac in another country (in its currency). This value is then compared with the actual exchange rate; if it is lower, then the first currency is under-valued (according to the PPP theory) compared with the second, and conversely, if it is higher, then the first currency is over-valued.’

For example, scroll over the US and the Big Mac is $4.80, then scroll over Russia, and you will see the burger at $2.55 which suggests the currency there, the rouble, is undervalued by 46.7%.

The Union Bank of Switzerland, UBS Wealth Management Research, has expanded the idea of the Big Mac index to include the amount of time an average worker in a given country must work to earn enough to purchase a Big Mac. This may give a more realistic view of the purchasing power of the average worker, as it takes into account more factors, such as local wages.



No comments found.
Anonymous User

Leave a Reply

Your email address will not be published. Required fields are marked *


You Might Want to Read

Welcome All Time Insurance Brokers to the McDougall Insurance Team!
We are happy to announce the we have merged with All Time Insurance Brokers Inc. in Ajax Ontario! All Time is a small 2 person...
Meet the Dougallers: Conor Hache
Stepping up next to the tee block, he hails from Prince Edward County, he’s a two time Club Champion at Bay of Quinte Golf and...
Welcome M.B. Kouri Insurance Brokers to the McDougall Insurance Team!
We are thrilled to announce that we have merged with M.B. Kouri Insurance Brokers Ltd. in Tamworth, Ontario! As of November 1st, 2023 we have...
Request a Free Quote

It’s simple and won’t take long.

Get a Quote800-361-0941

Person standing, looking down at laptop