Anyone who has traveled to a few countries and has tasted the odd hamburger in the many McDonald’s around the world, will have realized that, for example, a Big Mac, although it is omnipresent in all the establishments of the brand, it does not cost the same in each one. For this reason, since it is a universal product that changes in price depending on the location, the British magazine The Economist decided in 1986 to create the so-called Big Mac index , a benchmark for the economy.
The objective of this scale is not to evaluate the quality of those popular hamburgers, which came to the world in 1968 with the recipe: Two of meat, special sauce, lettuce, pickle, onion, cheese and bread. No. It is about comparing the cost of living between countries as well as measuring the spending capacity of their inhabitants . The starting point is the so-called purchasing power parity (PPP) theory, which roughly states that the exchange rate must equal the price of a basket of goods or services in different nations. In this case, the basket is the famous hamburger, a succulent snack for some, the summum of junk food for others.
According to the latest measurement, from January 2016, a Big Mac in the United States costs $ 4.93. If when converting the currency of a certain country to dollars, the result is below that amount, according to the cited index, that currency would be undervalued or depreciated. This is the case of Venezuela (0.66 dollars), Russia (1.53) and Ukraine (1.54). If it is above it, as is the case in Switzerland, Sweden and Norway, then your currency is overvalued or appreciated. In this curious way, a supposed mirror of the world exchange rate situation is offered.
