By Joseph Steele
In a world where economics can sound as stiff as a starched collar, there’s an unlikely hero that flips the script - the beloved Big Mac.
You wouldn’t expect the humble burger to be an indicator of economic health, but the tale of Burgernomics is a tasty one. First gracing the global stage in 1986, courtesy of The Economist magazine, it’s been tickling the tastebuds of economists ever since. So grab your burger buns and let's dive into the delicious world of Burgernomics.
Burgernomics is the wild child of the finance world, in which it takes the economic concept of ‘Purchasing Power Parity’ (or PPP) and serves it up in a dynamic way with a side of humour. PPP suggests that the global exchange rates should waltz gracefully so that the global superstar of fast food, the Big Mac, sports the same price tag wherever you may be, all in a universal currency. Imagine a world where that burger-shaped joy is a universal passport to flavour, no matter where you roam.
How does this edible concept work? Imagine you’re an epicurean explorer with a taste for economics. You find yourself in McDonald’s, where the Big Mac cozies up to your wallet for a tenner with change. Now, using the current exchange rate convert that price to a universal currency – let’s use the ever-reliable US dollar.
Miraculously, you find yourself in another corner of the globe where you’re in a Maccas getting ready to buy a local Big Mac. If you’re converted price skyrockets to heights even the tallest burger can’t reach, then it’s a pretty firm indication that the local currency is overvalued. On the flip side, if you find the price at the bottom of the fry basket, then it is likely that the local currency is undervalued.
Much like any great culinary adventure, it comes with a handful of caveats. The actual price of Big Macs can vary for reasons as diverse as the choice of cheese. Local production costs, taxes, tariffs and even the whims of discerning diners can all influence the end cost. While Burgernomics may not be an exact science, it represents an engaging and accessible foray into a complex and often inaccessible subject.Some enthusiasts have elevated the art of Burgernomics. Sushi, croissants and other delights have all made their way into edible currencies, offering a more diversified perspective on the global economic landscape.
Next time you find yourself with the humble burger in hand, remember the delightful connection between the Big Mac and the world of macroeconomics. Raise your burger high and raise a toasted bun to the global currency that is Burgernomics.
