What economic indicator compares currencies using the price of a McDonald’s Big Mac?

The Big Mac Index compares currencies using the price of a McDonald’s Big Mac.

The Economist created the index in 1986 as an informal way to illustrate purchasing power parity. Because the same branded product is sold in many countries, comparing its local price can provide a simple, accessible comparison of currency values.

The index is not a complete economic model. Big Mac prices also reflect local wages, rents, taxes, supply chains, regulations, and ingredients, so the comparison is only a rough guide.

The indicator became popular because it turns an abstract exchange-rate concept into a familiar consumer product. It is also called burgernomics in discussions of informal economic comparisons.