The Economist's Big Mac index seeks to make exchange-rate theory more digestible. They say, tongue-in-cheek, that it is arguably the world's most accurate financial indicator to be based on a fast-food item.
The Big Mac index is based on the theory of purchasing-power parity (PPP), according to which exchange rates should adjust to equalize the price of a basket of goods and services around the world. For them, the basket is a burger ... a McDonald’s Big Mac.
According to this measure, the most undervalued currency is India's Rupee at about 67% below its PPP rate. In India, a McDonald’s Big Mac costs just 95 Rupees on average, the equivalent of $1.54 at market exchange rates. In America, the same burger averages $4.62.
The interactive graphic, below, shows by how much, in Big Mac PPP terms, selected currencies were over- or undervalued.
The index is supposed to give a guide to the direction in which currencies should, in theory, head in the long run. It is only a rough guide, because its price reflects non-tradable elements such as rent and labor. For that reason, it is probably least rough when comparing countries at roughly the same stage of development. The Economist has added an adjustment option to account for this in the interactive version of the data.
The Economist's Big Mac index seeks to make exchange-rate theory more digestible. They say it is arguably the world's most accurate financial indicator to be based on a fast-food item.
The Big Mac index is based on the theory of purchasing-power parity (PPP), according to which exchange rates should adjust to equalize the price of a basket of goods and services around the world. For them, the basket is a burger ... a McDonald’s Big Mac.
According to this measure, the most undervalued currency is India's Rupee at 67% below its PPP rate. In India, a McDonald’s Big Mac costs just 90 Rupees on average, the equivalent of $1.50 at market exchange rates.
In America, the same burger averages $4.56.
The interactive graphic, below, shows by how much, in Big Mac PPP terms, selected currencies were over- or undervalued.
The index is supposed to give a guide to the direction in which
currencies should, in theory, head in the long run. It is only a rough
guide, because its price reflects non-tradable elements such as rent
and labor. For that reason, it is probably least rough when comparing
countries at roughly the same stage of development.
What bothers you most about someone else is often a clue about what you don't like about your own circumstances ... or, a political cartoonist could point it out instead.
Here are some of the posts that caught my eye. Hope you find something interesting.
The
World's First Vegetarian McDonald's. To capture more of India's $12 billion
fast-food market, the burger chain will jettison meat entirely in favor of the
McAloo Tikki burger and the McSpicy Paneer. (The Week)
Whether you like the Cowboys, or not, one thing we can probably all agree about is that old white dudes shouldn't rap too often. At least that's what my kids tell me when I try it.
With a little help from some friends whose palettes are a little more up-scale than mine, they dined at Charlie Palmer's at the Hotel Joule.
You Know It's Fancy When ...
Notice the tablet computer.
That is an interactive wine-list called the eWinebook. It sorts and sifts by type, country, region, vintage, or price.
Once you narrow down your selections to a few choices, a live person is available to help you make your decision.
On one hand, it helps the consumer feel better about their choice; and on the other, it increases the restaurants average wine bill. To a "Win - Win" proposition. Cheers.
They say memory is the second thing to go, as you get older … but I forget the first.
However, based on how hard it is getting for me to see at night (and the fact that I now have little flashlights stashed all over the place), my guess is that eyesight is the first thing to go.
It turns out that my vision wasn't as bad as I thought it was; but my choice of lighting was worse than I realized.
In an attempt to be environmentally conscious and have light bulbs that supposedly last longer, I started purchasing these strange curly fluorescent bulbs. My mind told me that they were fine, but my experience proved otherwise.
Recently, I switched to the natural spectrum bulbs from Verilux, and it's like somebody finally turned the light on. Externally, they may look the same, but they make a big difference. I can read again, my eyes don't hurt at the end of the day, and that strange tint on photos or web-cam videos is replaced with a much more natural palette of colors.
Coincidentally, I'm reading a book by Temple Grandin, an autistic woman with insights into how natural surroundings either calm or disturb animals and humans. According to her book, it turns out that one of the primary anxiety triggers is fluorescent lighting and its incessant flickering.
We spend so much time thinking about what we put in our bodies (like organic foods or vitamins), but to feel healthy we also should think about what we surround our body with ... and a full natural spectrum of light is a good start.
The Big Mac Index - A Feast of Burgernomics
The Economist's Big Mac index seeks to make exchange-rate theory more digestible. They say, tongue-in-cheek, that it is arguably the world's most accurate financial indicator to be based on a fast-food item.
The Big Mac index is based on the theory of purchasing-power parity (PPP), according to which exchange rates should adjust to equalize the price of a basket of goods and services around the world. For them, the basket is a burger ... a McDonald’s Big Mac.
According to this measure, the most undervalued currency is India's Rupee at about 67% below its PPP rate. In India, a McDonald’s Big Mac costs just 95 Rupees on average, the equivalent of $1.54 at market exchange rates. In America, the same burger averages $4.62.
The interactive graphic, below, shows by how much, in Big Mac PPP terms, selected currencies were over- or undervalued.
The index is supposed to give a guide to the direction in which currencies should, in theory, head in the long run. It is only a rough guide, because its price reflects non-tradable elements such as rent and labor. For that reason, it is probably least rough when comparing countries at roughly the same stage of development. The Economist has added an adjustment option to account for this in the interactive version of the data.
Posted at 05:39 PM in Business, Current Affairs, Food and Drink, Ideas, Market Commentary, Trading Tools | Permalink | Comments (0) | TrackBack (0)
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