What index uses Big Mac prices to compare purchasing power between countries?

The index that uses Big Mac prices to compare purchasing power between countries is the Big Mac Index.

The Economist introduced it in 1986 as an informal illustration of purchasing power parity, or PPP. It compares the local price of a McDonald’s Big Mac with its price in another country, often the United States, to estimate an implied exchange rate.

The sandwich was chosen because McDonald’s operates internationally and the product combines many local costs, including ingredients, wages, rent, taxes, and advertising. That makes it a quick, memorable snapshot of relative prices rather than a complete economic measure.

It is not a perfect substitute for official PPP calculations. Big Macs differ somewhat between markets, McDonald’s pricing reflects local strategy, and the chain is absent from some countries. “Whopper Index” and similar names are playful alternatives, not the established index.