Why did The Economist spend so much time and money comparing burger prices?Īccording to purchasing power parity (PPP) theory, in the long run, the prices of an identical basket of goods and services should be equal in any 2 countries. The Big Mac Index compares the price of Big Macs, a burger offered by McDonald’s, across several countries. This article explores the meaning of the Big Mac Index, the theory it attempts to explain, and other such off-beat indices. ![]() ![]() In 1986, The Economist developed the Big Mac Index to simplify purchasing power parity theory. Purchasing power parity, a theory that attempts to explain exchange rates, is one such theory. Various economic theories can be very difficult for laypeople to understand.
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