The Big Mac is sold in some sixty countries, to an almost identical recipe. It was this uniformity that, in 1986, gave The Economist the idea of turning it into an instrument for measuring exchange rates.
The principle
The index is based on purchasing power parity. The newspaper explains it as follows: the theory holds that “in the long run, exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services - in this case, a burger - in any two countries”.
If a Big Mac costs 6.12 dollars in the United States and 25.5 yuan in China, the “implied” exchange rate is 4.17 yuan to the dollar. If the actual rate is much higher, the Chinese currency is, according to the index, undervalued.
A joke, and openly so
The newspaper has never claimed otherwise, and credit must be given where it is due:
“The Big Mac index was invented by The Economist in 1986 as a lighthearted guide to whether currencies are at their ‘correct’ level. […] Burgernomics was never intended as a precise gauge of currency misalignment, merely a tool to make exchange-rate theory more digestible.”The Economist, Big Mac index methodology page - original in English
The joke went wrong, in a sense. The newspaper itself notes that the index “became a global standard, included in several economic textbooks and the subject of at least 20 academic studies”. The Review of the Federal Reserve Bank of St. Louis devoted a twenty-page article to it in 2003, under the title “Burgernomics”, which studies the deviations from what its authors call “McParity”.
A useful clarification: there is no indication that any central bank uses this index as an instrument of monetary policy. What is established is that it has been studied in a research journal of the St. Louis Fed and that it appears in university textbooks.
The limitations, acknowledged by its authors
The main bias is structural: average prices are lower in poor countries, because labour costs are lower there. A cheap Big Mac in Beijing therefore does not prove much. In July 2011, The Economist introduced an adjusted version, which relates the price of the burger to gross domestic product per person:
“To estimate the equilibrium value of a currency, we use the line of best fit between Big Mac prices and GDP per person. The difference between the price predicted for each country, given its average income, and its actual price gives a better guide to under- or overvaluation than the ‘raw’ index.”The Economist, 28 July 2011 - original in English
Other limitations are acknowledged: non-tradable costs (property), margins, advertising, taxation, the degree of local competition, the social status of fast food, and the fact that the product itself varies - in India, in the absence of beef, the index is calculated on the Maharaja Mac. Finally, geographical coverage is limited to where the brand is present: in Africa, the index covers only a handful of countries.
The latest values
According to the data published by The Economist in its public repository, the most recent observation is dated 1st January 2026 and covers 54 countries and areas. The US Big Mac serves as the benchmark, at 6.12 dollars.
| Country or area | Price converted into dollars | Raw difference from the United States |
|---|---|---|
| Switzerland | 9,08 $ | +48,4 % |
| Uruguay | 8,76 $ | +43,1 % |
| United Kingdom | 7,08 $ | +15,7 % |
| Euro area | 7,05 $ | +15,3 % |
| United States | 6,12 $ | benchmark |
| China | 3,66 $ | −40,2 % |
| Japan | 3,03 $ | −50,5 % |
| India (Maharaja Mac) | 2,51 $ | −58,9 % |
| Taiwan | 2,47 $ | −59,6 % |
A detail that is more than a detail
For the price of a burger to serve as a yardstick presupposes one thing: that the product is strictly the same everywhere, and that the network is disciplined enough for it to remain so. This is exactly what the franchisor's control over its franchisees guarantees - the very control whose smallest details are organised by the contract. The Economist's index does not only measure exchange rates; it indirectly attests to the uniformity of a network.
Finally, since price is the variable here, it should be noted that European competition law specifically prohibits the franchisor from imposing its retail prices - it can only recommend them.
An index the company did not commission
Neither McDonald's Corporation nor its subsidiaries take part in compiling the index: they provide neither the data nor the method. The newspaper records the displayed prices, applies the exchange rate, and publishes. The sandwich serves as a yardstick because it is made almost identically everywhere - it is its standardisation, not its brand, that makes it a measuring instrument.
The Big Mac also leads several parallel lives. It is also a trade mark - part of whose European registration fell in 2024, for lack of sufficient proof of use, at the end of revocation proceedings. And it is, for a Wisconsin resident named Don Gorske, the subject of a certified world record: more than 35,000 eaten since 1972.