How The Cost of a Big Mac Defines an Economy

Every year the Economist publishes the Big Mac Index which really is a currency comparison tool. using the theory of PPP for purchasing-power parity, the index assumes that over time global currencies move so that goods cost the same in every country. This allows us to see if one currency is overvalued versus another. But we think there’s another measure that better defines how the cost of a Big Mac defines an economy, and that’s how many minutes an average worker needs work in order to afford a Big Mac.

In this measure we can see how wealthy or well-paid a typical employee is in one city versus another. This is a useful measurement to see how much purchasing clout a worker has from one region to another and to measure the cost of living versus typical salaries.

As you’d imagine workers in more wealthy cities need to work less minutes in order to be able to afford a Big Mac than their counterparts in poorer ones. On the global index Hong Kong and Tokyo lead, with New York, LA and London rounding out the top 5 cities where people can easily afford a Big Mac.

At the bottom of the list places like Jakarta, Mexico City and Nairobi make it harder to afford a meal from mcDonalds. In fact a typical worker in Hong Kong only needs rot work about 9 minutes in order to purchase a Big Mac whereas a typical worker in Nairobi needs to invest over 19 times as long in order to buy a similar burger. This discrepancy shows the real purchasing power of citizens in each city.