October 9, 2017 § 1 Comment
I’ve always wondered about the “heat index” and “chill factor,” ways to say, “We know how hot or cold it is, but here’s how it feels.” Obviously there are scientific factors figured into the calculations, but it makes me think we could also have a “Great Grandma Gordon Index”: “I’m telling you, it’s at least 125 degrees in the shade!” or a “Guy Who Lives Down the Block Index: “It’s so cold I can’t feel my left foot!”
When you travel, you see how much weather standards aren’t standardized around the world, either. For people in hot climates, the winter parkas might come out when the temperature dips below 60°F, or for those where cold is routine, when they register the same temp, it’s time to put on shorts.
But keeping track of relative weather norms isn’t the only concern when going abroad. There’s also that finances thing. You want to know how much money you’ll need to spend while spending time in another city—in terms that make sense. So you might be thinking “How much does, for instance, a Big Mac cost there?”
Well, funny you should ask.
One of the most well-known economic indexes has the answer. Taking its name from the classic McDonald’s sandwich, the Big Mac Index was developed in 1986 by The Economist “as a lighthearted guide to whether currencies are at their ‘correct’ level.”
“Burgernomics,” says The Economist “was never intended as a precise gauge of currency misalignment, merely a tool to make exchange-rate theory more digestible.” But the Big Mac Index has gotten a lot of weighty attention, garnering coverage in textbooks and academic studies. In fact, the index is taken seriously enough that a New York Times article postulated in 2011 that Argentina was artificially keeping its Big Mac prices down to influence its place on the scale. And Computerworld reported this year that the malware Fatboy, a ransomware-as-a-service (software that locks up a computer and demands payment to decrypt its data) uses the Big Mac Index to determine how much ransom needs to be paid for a particular location.
The Big Mac Index is based on the idea of purchasing-power parity. I’m not an economist, so it’s easy for me to get lost in the weeds on economic theories. But rather than use it as a rigorous currency-valuation metric, I see it more as a quick-and-dirty cost-of-living index.
If you have a hunger for that type of thing, too, I’m glad to tell you there’s much more on the menu than just the Big Mac. Here’s a list to whet your appetite:
The Tall Latte Index
Also called the Starbuck’s index, this is another iteration from The Economist, comparing prices from the coffee chain.
The KFC Index
Because McDonald’s has restaurants in only three African countries, the Big Mac Index doesn’t work very well on that continent. Therefore, Sagaci Research developed an index based on KFCs, which are present in nearly 20 nations in Africa. The metric is based on the price of an Original Recipe 15-piece bucket.
The Mini Mac Index
Invented by Benn Steil and Emma Smith of the Council on Foreign Relations, it compares the global prices of iPad Minis.
McDonald’s Index of Humanitarian Access
Jonathan Whittall, head of humanitarian analysis at Médecins Sans Frontières/Doctors Without Borders writes that
no country with a McDonald’s has ever rejected humanitarianism on ideological grounds. It is in those states where the economic and political influence of the west still has space that all components of the west’s foreign policy are accepted: both McDonald’s and INGOs.
The Coca-Cola Index
This analysis branches out a bit more, showing the relationship of Coke consumption with quality-of-life factors. Using UN figures, The Economist (those guys sure are busy), shows that countries’ higher rates of Coca-Cola drinking correlate with higher wealth, health, and political freedom. Have a Coke and a smile?
The Happy Planet Index
Speaking of smiles, the New Economics Foundation publishes this global ranking of “how efficiently residents of different countries are using environmental resources to lead long, happy lives.” (I really wanted to find a “Happy Meal Index,” but so far, it hasn’t been created yet.)
And while we’re on the topic of quality of life, we have
The Better Life Index
from the Organisation for Economic Co-operation and Development
The Where-to-Be-Born Index
from the Economist Intelligence Unit
And finally, if you’re looking for some straight-up cost-of-living indexes, take a look at
The Numbeo site describes itself as “the world’s largest database of user contributed data about cities and countries worldwide.” Not only does it have an overall cost-of-living index, it also includes indexes that compare property prices, crime, health care, pollution, traffic, quality of life, and travel costs.
(D.H. and R.L.W, “The Big Mac Index,” The Economist, July 13, 2017; Daniel Politi, “Argentina’s Big Mac Attack,” Latitude, The New York Times, November 24, 2011; Darlene Storm, “Local Cost of a Big Mac Decides Ransom Amount for Fatboy Ransomware,” Computerworld, May 8, 2017; Jonathan Whittall, “The McDonald’s Index of Humanitarian Access,” MSF Analysis, February 7, 2014)