"Wealth will increasingly be defined by our ability to go offline whenever we want." - Fernando Gros
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Blog // Thoughts
October 15, 2007

Speaking Of Big Macs (The Burger Kind This Time)

If you haven’t already done so then check out The Economist’s Big Mac Index (one for the bookmarks); a very revealing way to look at the relative strengths of currencies and the economies that support them. The index has a few issues – McDonalds does not have the same market penetration from one country to […]

If you haven’t already done so then check out The Economist’s Big Mac Index (one for the bookmarks); a very revealing way to look at the relative strengths of currencies and the economies that support them. The index has a few issues – McDonalds does not have the same market penetration from one country to the next, Western Fast Food has varying price points against local foods in different markets and so on. However, as a rough guide, it’s a fine explanation of why some economies function the way they do against global markets and why some currencies are priced the way they are. For the savvy and investment-minded, it can also though up some interesting anomalies.

Of course, I am not endorsing the guide as an investment strategy.

[tags] Big Mac Index, Currency, Economics [/tags]

Responses
Paul 15 years ago

Blimey iceland is an expensive place to have a mac attack!

Stephen 15 years ago

A more recent, but similar, index is the one that uses iPod affordability as an index of currency strength and purchasing power.

See https://www.stuff.co.nz/4226944a18335.html

Hong Kong’s top of the list!

Fernando Gros 15 years ago

Paul – true, but I would imagine in Iceland there would be better things to eat (say he who acquired a taste for the McAllo and McChicken Tikka).

Fernando Gros 15 years ago

Stephen – thanks for that list. It certainly highlights the effects of local taxes on prices, which in part explains the higher costs in Europe. However, I smell something “funny” here with the claims of affordability for India (and Pakistan). My experience was that it was *never* cheaper to buy locally for these sorts of goods than buying in Europe. Here in HK the affordability really comes from being pegged to the US dollar, more than anything else.

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