Big Mac Attack
When budgeting for your trip to Europe, food is often the most difficult item to factor in. Airfare and hotel prices are set and web searches will reveal the prices of many attractions you may want to visit. But food? Unless you are an uber-planner, who knows where you’ll be eating every meal and what you’ll be in the mood for? Enter the Economist magazine and their Big Mac Index.
Stick with me for a moment; this is information straight from the Economist’s website on what the Big Mac Index is and seeks to do: Burgernomics is based on the theory of purchasing-power parity, the notion that a dollar should buy the same amount in all countries. Thus in the long run, the exchange rate between two countries should move towards the rate that equalises the prices of an identical basket of goods and services in each country. Our “basket” is a McDonald’s Big Mac, which is produced in about 120 countries. The Big Mac PPP is the exchange rate that would mean hamburgers cost the same in America as abroad. Comparing actual exchange rates with PPPs indicates whether a currency is under- or overvalued.
Fascinating – but what does it mean to you? Results from the 2008 survey reveal you won’t be getting much burger for your buck in Europe. The Euro, Swedish krona, British pound and Swiss franc are all overvalued when compared to the dollar. The best bargain places to get your two all beef patties are Poland, Lithuania and Latvia. You can use this as a tool when planning your meal budget by seeing how the local currency is valued towards the dollar. For example, the index values the Euro at 50% to the USD, so if you are going to France, add about 50% to what you would spend on meals on a domestic holiday. Check out the full results here.
Photo Credit: Phil Dragash@Flickr
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POSTED IN: Cheap Eats, Eastern Europe, Western Europe
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