Burgernomics (yum)

Toss those complex economic statistics out of the window, burgers have come to rescue us. It was just 25 years ago 'The Economist' decided that the Big Mac index (prices of hamburgers- particularly Big Macs, a common feature in 120 countries) might be a good economic indicator and may be used to compare performance across countries. Economists however have become more and more convinced with the accuracy of this index!


(Please look beyond the burger, the basket of goods involved in the making of a big mac are food, materials, wages and rent, which only slightly differs from the common food, fuel, rent and healthcare)


Today, the burger valuer suggests that euro is overvalued against the other main currencies (Don't buy burgers in Europe!). What does this mean? It highlights the europe's internal problems- Greece Spain, Portugal and Spain have lost competitiveness relative to Germany.


Burgernomics was formulated initially to judge whether a government was overstating or understating its inflation rate. In the case of Argentina, Big Mac prices have risen well above 10 percent points each year than the official Consumer Price Index- one of the biggest gaps than other countries tested.


However, to completely rely on Burgernomics is an error as American politicians use it to compare extremes. Apparently, the Big Mac index proves that the Chinese Yuan is hugely undervalued. Obviously, burgers are cheap in China as well as all emerging economies because:


1. Wages are lower
2. Emerging economies tend to be exporters of agricultural products 

According to 'The Economist', if the index is adjusted to GDP per person, it shows that the yuan is now close to its fair value against the dollar. Studies do show that the Big Mac index is close to Purchasing-Power-Parity rates calculated using instrinsic methods.


A problem with conventional official statistics is that they are available after a time lag and might be subject to scrutiny, this explains the popularity of quirky indexes such as the Crane Index (the number of cranes you can see from a given point in a city). Oh Dubai tops the list by the way. And the lipstick index (apparently shopaholic women tend to buy more lipsticks if they can't afford dresses- how would I know??)


Lets welcome unconventional measures. What do you suggest?


My personal experience tell me that loads of crazy stuff get auctioned on ebay when a recession hits.