Economists have a tendency to spout off a number of statistics and antiquated indicators when it comes to measuring a country’s economic progress. But forget employment numbers, worker productivity rates and overall GDP — some are now touting the use of the average price for a local Big Mac as an effective way to judge whether economic reforms in an area are working.
Economist Guntram Wolff from Bruegel, a Brussels-based think tank, is using hamburger prices across the euro zone as a gauge for whether a country’s economy is still struggling. Apparently, burgers are one of the more effective (and delicious) indices for whether reform measures passed to boost a region’s economy are working. Wolff studied burger prices for a number of euro zone countries from July 2011 through January 2013, and discovered countries like Ireland who saw price dips for Big Macs had tightened their belts and were struggling more than other euro zone nations. During that period, Ireland made severe spending cuts and the price of a burger fell from 3.80 euros to below 3.50.
He contrasted his findings with other countries such as Germany, which saw the rate for its burgers rise above the euro zone average during that period to 3.64 euros (around C$4.91 at current exchange), which has a stable and growing economy.
In related news, The Economist‘s Big Mac Index, which is a ‘lighthearted guide to whether currencies are at their “correct” level’ indicates that Venezuela sells the most expensive Big Macs priced around US$9. (Baseline used is the price point of US$4.37 in America.) The same burger in China retails for only US$2.75. In Canada, McDonald’s iconic burger sells for C$5.41, which the index flags as an overvaluation of 23.5 per cent.