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Big Mac Index

Burgernomics, anyone?

Moving on from Trade imbalances, I started work writing on prices around the world and was examining the Big Mac Index from The Economist when I discovered that some other geniuses at UBS has actually moved further to demonstrate differences in purchasing power of average wage-earners by calculating the time taken for them to earn a Big Mac in their country, which is totally cool! This is probably pushing my nerd reputation a little too far but anyways, it's worth a look.

The latest edition was published in 2009. And there you can see glaring differences in the standard of living and welfare of workers (albeit assuming that Big Macs were what the people wanted). The average Nairobi worker had to work more than two and a half hour in order to enjoy a Big Mac while the dudes in Tokyo, Toronto and Chicago could enjoy a Big Mac every 12th minute they worked. That is a difference of more than 12 times! By the time the Nairobi worker sits down to enjoy his first Big Mac, these other dudes would have enough money to buy more than 5 Extra Value Meals in their markets respectively.

If we do a slight comparison with the situation in the 2006 report, you'd realise further that while the guy at Chicago spent the same time working for a single Big Mac but the guy in Nairobi worked less in 2006! He became worst off 3 years later. In fact, he only had to work one and a half hour for a Big Mac in 2006. Apparently prices have rose so much more than wages that the poor Kenyan now have to work an extra hour before getting to enjoy his Big Mac.

Of course, this also reflects productivity differences between countries and talking about that, it's time for me to get back to work.

The UBS reports and updates are available on this page.