The Burger That Explains the World

Here's the world truths hiding inside your combo meal.

---

McDonald's, I wasn't familiar with your game. I thought you existed to probe the depths of what we'll consume. Imagine my surprise when I discovered you help answer one of our most elusive questions: what does life actually look like in other countries?

When judging quality of life, we can't measure happiness or gratitude directly, so we settle for what we can count: what people can buy with their money. But here's the problem. If someone in India earns 48,000 rupees a year, how do we make sense of that? What can that money get them? To answer that, you'd technically need to compare the price of everything, groceries, rent, haircuts, in India to the price of everything in your currency. That's nearly impossible.

So instead, why not just compare the price of one thing that exists almost everywhere in the world? The Big Mac.

The Big Mac Index

That's the idea behind the Big Mac Index. The Economist tracks the price of a Big Mac in different countries to estimate how much money you'd need in each currency to buy the same burger. This is the core idea of purchasing power parity (PPP): figuring out what a given amount of money can actually buy you, regardless of which currency it's in.

This is also, in a sense, what market exchange rates are trying to do. When you exchange dollars for euros, that rate is supposed to reflect what your money is "really worth" in another country. But nominal exchange rates tell you what currencies are worth on paper, while PPP tells you what they actually buy in practice. That gap, between what your money is worth on paper and what it actually gets you, is where the interesting stuff lives.

Knowing where to get a cheap burger is fun, but knowing where to get affordable, life-saving medicine matters a lot more. Medical tourism is growing for exactly this reason. Imagine how much more empowered people would be if they could easily compare prices for the things they actually need. Everyone does mental PPP math for vacation but few understand how it’s baked into global issues. 

The International Comparison Project

PPP is the basis for how the World Bank defines global poverty. You can't answer that with a Big Mac. For that, we need to compare the entire world. We need Alan Heston and Robert Summers--the men who tried.

These two traveled the globe comparing the prices of thousands of everyday products. Shop owners grew frustrated when they realized the men asking detailed questions about rug quality had no intention of buying anything. But Heston and Summers had bigger goals in mind.

Their work became the foundation of the International Comparison Program (ICP), still considered the gold standard for PPP data today.

When they dug into the numbers, they found something surprising: lower-income countries seemed to be undervalued. Based on PPP, their currencies should have been worth more than the market exchange rate suggested. Systemic ism! Or so I thought.

Heston and Summers saw it differently.

As countries with weaker currencies grew wealthier through exports, incomes at home rose. So did their currency. Here's why: a burger, lettuce and bun can trade globally, so its price tends to converge. But labor and rent stay local. They can’t be traded across borders, so their prices stay much lower in poorer countries. That gap between local and global prices is part of what skews PPP. Not bias. Just economics.

What's more interesting are the exceptions. Normally, when a country gets wealthy from exports, that wealth flows back home, prices rise, and the advantage fades. But not every country wants that. Relying heavily on exports can create economic dependency, and not every government wants to restructure its economy around another’s demand.

That's partly why places like Taiwan and Hong Kong have bucked this trend. Qatar, on the other hand, relies on underpaid foreign labor, which keeps those higher wages from ever circulating back into the local economy. Two very different examples of how governments putting their hand on the scale to get what they want.

Here's the thing though: you don't need to work in economics for any of this to matter to you.

If you're traveling, PPP is why you feel rich in Southeast Asia and poor in Switzerland on the same budget. That feeling isn't random, it's PPP. Just informal.

If you're working remotely and earning dollars while living somewhere cheaper, you're doing geo-arbitrage, which is really just applied PPP. If you're sending money home to family in another country, a $500 remittance doesn't mean the same thing on both ends, and you probably already know that intuitively.

Investors watch for currencies trading far from their PPP "fair value," since that gap often signals either opportunity or risk. And for any business paying employees or pricing products abroad, nominal exchange rates can be deeply misleading, a salary that looks cheap in dollar terms might actually be generous locally, or the opposite.

It's amazing what a clearer view of the world can give us, even if we're still working with incomplete data and broad strokes. I'm grateful for the people who paid the sweat equity to help us understand it better.

It almost makes me want to eat a Big Mac. Almost.

Data

Code and data available on my Github!