Our Big Mac index shows how burger prices differ across borders

The big macPPPGDPPPPGDPGDPIMFGDP index was invented by in 1986 as a lighthearted guide to whether currencies are at their “correct” level. It is based on the theory of purchasing-power parity (), the notion that in the long run exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services (in this case, a burger) in any two countries.Burgernomics was never intended as a precise gauge of currency misalignment, merely a tool to make exchange-rate theory more digestible. Yet the Big Mac index has become a global standard, included in several economic textbooks and the subject of dozens of academic studies. For those who take their fast food more seriously, we also calculate a gourmet version of the index.The -adjusted index addresses the criticism that you would expect average burger prices to be cheaper in poor countries than in rich ones because labour costs are lower. signals where exchange rates should be heading in the long run, as a country like China gets richer, but it says little about today’s equilibrium rate. The relationship between prices and per person may be a better guide to the current fair value of a currency.In July 2022 we updated the Big Mac index to use a McDonalds-provided price for the United States. We also changed our methodology for how we calculate the -adjusted index, the full history of which will now be adjusted whenever the ’s historical series are updated. The previously published versions of both indices are available in our archive.Read more about the Big Mac index in “”. You can also download the data or read the methodology behind the Big Mac index .