Burgernomics: The Big Mac Index

To the left is a chart from the Economist that shows the relative cost of a hamburger in a number of different countries. Having been to Norway, I'm in now way surprised to see it top the list. Still, in a country where a single beer costs upwards of $17, the $7.20 prices actually seems reasonable.

Of course this is the Economist and fun isn't had without a more serious point being made:

The index is a lighthearted attempt to gauge how far currencies are from their fair value. It is based on the theory of purchasing-power parity (PPP), which argues that in the long run exchange rates should move to equalise the price of an identical basket of goods between two countries. Our basket consists of a single item, a Big Mac hamburger, produced in nearly 120 countries. The fair-value benchmark is the exchange rate that leaves burgers costing the same in America as elsewhere.