Big Mac Index

Many comparisons between the U.S. and Chinese economy have been made lately both in the press and by numerous talking heads.  At our most recent Pie Party this topic came up for discussion.  Caught by surprise, J R (incredibly!) turned to technology for an answer.  He brought up the Big Mac Index.

Atlas loves the Big Mac Index.  In short, since this icon of America is made in almost every corner of the world to the same stringent standards, The Economist, a British weekly, concocted the index years ago to measure what they call purchasing power parity (PPP), a way to compare prices everywhere in something resembling a common unit.  This January they put the price at $5.28 here in the U.S. and just $3.17 if you bought it in China with our dollar.

Essentially, both Jerry and Jack asked, “So what?”  They felt, and rightly so, that relative prices mean little if no one can afford to buy the item in question.  Subsequently, Christopher has turned to one of most irrefutable sources for help: the Central Intelligence Agency.  He asked them, “So what?”

The CIA informed him that China’s per capita income in 2017 was $16,600 versus $59,500 here in America.  A quick dose of math shows us that the average Chinese makes about 28 percent as much as we do; but, a Big Mac costs us 67 percent more.  Armed with those facts, I’m sure you will want to ask, “So what?”

Look.  You have been informed.  You have data from the most impeccable sources, the CIA, The Economist, and, of course, Atlas.  Interpret it as you will.  For us, it’s lunch time.  Do you want fries with that?                             (by J R)