When the September 1986 The Economist hit newsstands, it
contained a new form of measuring purchasing power parity, which is a way of
calculating the effectiveness of currency exchange rates.
The standard they used to measure this purchasing power
parity? A McDonalds Big Mac. That’s right. Thanks to a woman named Pam Woodall
and her semi-humorous take on world economics, financial minds across the world
have referred to the Big Mac Index as a reasonable real-world measure of
inflation and exchange rates.
So much so, in fact, that after being pointed out for a huge
gap between its burger inflation and the country’s official rate, McDonalds
chains all over Argentina were asked to sell Big Macs at a lower price to
manipulate the country’s performance on the index.
The Economist now varies
their items from time to time, using a Starbucks tall latte, for example, but
the phrase “burgernomics” is still going strong!
