THE ECONOMIST: Big Mac Index measures how many iconic burgers a typical worker a afford with their wages

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THE ECONOMIST: Big Mac Index measures how many iconic burgers a typical worker a afford with their wages

Since 1986 The Economist has produced the Big Mac index as a light-hearted gauge of whether currencies are at their “correct” level.

The famous burger is a good test of currency valuations because of its global uniformity and ubiquity. The same properties make it a useful way of comparing international salaries: how many Big Macs, in principle, can a typical worker afford with their wages?

The more conventional way of comparing incomes is to convert wages in different countries into a common currency. But that is misleading because exchange rates are volatile. Moreover, one US dollar goes a lot farther in, say, the Philippines than it does in America itself.

The Big Mac helps to solve this problem as a ready-made illustration of purchasing power: it represents a bundle of goods (or, rather, a bun of goods) that is identical everywhere, and so it serves as a yardstick of the real cost of things from country to country.

For the Big Mac wage analysis (the MacWage, for short), we started with full-time, pre-tax earnings in 2023 as reported by the OECD, a club of 38 mostly rich countries.

We then made a simple adjustment, dividing wages by the price of a Big Mac— all in local currencies. That gave us the number of burgers that the average full-time worker can buy annually.

The results? Americans can perhaps be forgiven for having somewhat expansive waistlines.

Camera IconThe Big Mac index reveals how many of the famous burger the average wage can buy in each country. Credit: The Nightly

Although fast-food prices have skyrocketed since the pandemic, Americans still earn more greasy calories than any others in our analysis. The average ********* worker takes home the equivalent of 14,000 Big Macs in wages for a year of full-time work. At 590 calories a pop, they could buy enough burgers to keep 10 adults fed for a year.

The Swiss and Danes come, respectively, second and third in MacWages.

At the bottom are ******** workers, who can afford to buy about 2500 Big Macs with their average annual wages.

A standard objection to any measure of higher incomes in America is that its workers generally get less time off. To factor this in, we looked at average hours worked, based on data from the OECD and the Conference Board, a business research group. This yields slightly different results.

Americans still get more than enough Big Macs—pulling in the equivalent of about 7.4 per hour on the job—but they drop to third in the ranking. The burger champions are the Danes, who earn 8.1 per hour, followed by the Swiss. Looked at another way, the average Dane works for just seven minutes to make enough money to buy a Big Mac. In Mexico—still at the bottom of the rankings after this hourly adjustment—workers must toil for about 57 minutes.

The MacWage is, of course, far from perfect.

Danes may celebrate their top performance, but our measure misses how income taxes (which can surpass 50 per cent in Denmark) eat into their burger budgets. Much else of what goes into the cost of living, from housing to transportation, is also barely reflected in the price of burgers.

In a developing country such as Mexico, where housing is relatively cheap and ********* fast-food indulgences relatively expensive, a burger-based wage calculation understates how much stuff an average worker can actually afford.

Still, as a quick method for comparing incomes around the world, the MacWage is easily digestible.

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