Wouldn't eat the stuff, but The Economist's Big Mac Index is always worth a chewing over. It is "based on the theory of 'purchasing-power parity'. Under PPP, exchange rates should adjust to equalise the prices of a basket of goods and services across countries". Here that basket is the Big Mac. For example, the cheapest Chinese burger can be bought for $1.23, compared with an average American price of $2.80, suggesting the yuan is 56% undervalued against the dollar. Follow the link to check other disparities.
Posted by Joe at January 18, 2004 09:17 PMThe assumption of the Big Mac index, of course, is that the price of a readily available 'commodity', identical in all markets, will be available at the natural market price. The Japanese Big Mac, on the contrary, is most probably not the same product found in the US, and we're well aware that the company is keeping the price artificially low.
One wonders when the company (the Japan company) will run out of money with its tactic of keeping prices low to keep the stores full.
Posted by: DJ at January 19, 2004 12:10 PMThe Japanese and U.S. Big Macs are different? How? I don't eat them here or there so wouldn't know, but I thought the whole deal with these burger chains was that they kept things the same whether you buy it in Peking or Peoria? And the Japanese are keeping prices artifically low? Wouldn't go in there if they were giving them away, but still find it surprising.
Posted by: Joe at January 19, 2004 01:40 PMDifference: according to personal observation. The Japanese patties are smaller, and I would be quite surprised to find out if they are all-beef.
Prices: according to a foods analyst at UBS.
Posted by: DJ at January 19, 2004 02:59 PMThe American ones are bigger. Now there's a surprise. ;+)
Posted by: Joe at January 19, 2004 09:39 PMI've been to McD's in the US, the UK, France and Italy and it all seems identical food-wise (with the exception of beer being served in French and Italian MDs). I'd be surprised if that parity is very accurate because there would be those countries where it would be impossible for most of the populace to afford the food. I guess the Chinese example bears that out?
American companies used to use that to calculate expenses for those travelling abroad, I guess under the assumption that Americans would only want to eat familiar food and so would get all their meals at McDonalds!
I have to admit to not understanding economics very well at all, however... :-)
Posted by: Lisa at January 19, 2004 11:42 PM