The informal economic index comparing Big Mac prices across countries is the Big Mac index.
The Economist introduced it in 1986 as a lighthearted way to illustrate purchasing power parity (PPP), the idea that exchange rates should eventually make comparable goods cost roughly the same in different countries. A Big Mac was chosen because McDonald’s operates internationally and the sandwich combines local ingredients, wages, rents, taxes, and operating costs.
To calculate it, analysts compare a Big Mac’s price in one currency with its price in another, producing an implied exchange rate. Comparing that rate with the actual market exchange rate can suggest whether a currency appears overvalued or undervalued. The index is not a precise measure: taxes, local demand, supply chains, and different restaurant costs all affect prices.
It is also commonly confused with purchasing power parity itself. PPP is the broader economic theory; the Big Mac index is a memorable, simplified application of that theory. Related “burgernomics” comparisons have inspired other informal price indexes.