Eric: Are you going to write about the most expensive burger in the world? The Economist published that Switzerland has the most expensive big Mac in the world. You like this stuff, you publish such stats all the time.
Eva: Oh Eric…
Eric: Tell me now that you are not dying to write about any statistics related to Switzerland. Admit it, you love the numbers.
Eva: Did you read the article?
Eric: Yes I did.
Eva: And what did it say?
Eric: That we have the most expensive Mc Donalds in the world.
Eva: This is what you understood?
Eric: Yes, Switzerland is very expensive.
Eva: Oh dear. Please read the article again. And yes I will write about it. Not because I love statistics (I do I admit it), but because it is so NOT what you understood.
Eric: It is not that Switzerland and our Mc D are expensive? Tell me now that you disagree.
Eva: I do not. But the Big Mac Index is about the currencies of the world more than anything. Pay attention dear, because I did read the article, unlike you. The Burgernomics are trying to compare how over- or under-valued currencies are and in this case the Swiss Franc. Not everybody approves this approach. Some experts find it ridiculous. Lots of comments like that on blogs and forums. The theory behind it is that if all currencies were equal then a Big Mac would cost the same.
Eric: Huh? Give me an example.
Eva: If the Big Mac in Switzerland costs 6.50CHF and the exchange rate is let’s say 0.95 CHF/USD, then this is 6.82USD. Since the Big Mac in US costs 4.79USD, then 6.82/4.79 gives 1.42 and the Big Mac Index gives that the CHF is overvalued by 42%. Clear?
Eric: Kind of.
Eva: Without trying to confuse you more, the Economist offers another index adjusted this time for the GDP per capita, or in simple words, adjusted for how money we earn here. Then the Big Mac or actually the CHF is overvalued by 13% only.
Eric: I think I regret I touched this topic. A bit heavy for my taste for an afternoon coffee at Boreal. I thought it was about burgers…
Eva: Let’s make it about burgers then. Choose a place for tonight. Alternatively we could jet off to Venezuela where we could get 9 burgers for the same price of 1 in Switzerland. I can see you getting easily obese down there…
Eric: I go for quality and not quantity, “dear”. Most of the time…
Eva: Then consider a trip to Vegas for the world’s most expensive burger at Le Burger for 777USD. They might meet your quality standards…