The Big Mac Index (or How Far Does Your Dollar Go In Another Country?)

Even if you move to another country, you will find many things that remind you of the United States. You will see Walmart, McDonald’s, Costco, Home Depot, Pizza Hut, Coca-Cola, Lego, L'Oréal, Nike, and many other familiar names everywhere.

 

One of those familiar names will show you the value of your US Dollar. You can compare the economies of different countries by comparing the price of a world famous sandwich.

 

The Big Mac Index was established by the Economist Magazine in 1986 as a semi-humorous way of explaining purchasing power in various countries. We can compare the costs because Big Macs are everywhere.

 

 

How far will your dollars go? Is it really cheaper to live somewhere else? The fun way to answer is with an example based on a sandwich. The same Big Mac you bought in January 2017 in the United States for $5.06 could be purchased for $2.23 in Mexico. Your dollar buys more than twice as much in Mexico.

 

You may be wondering whether the lower labor costs make a difference. The Economist magazine developed an adjusted index which takes into account the labor costs and adjusts the price of the Big Mac to take those costs into consideration. Although some of the countries see changes, the Index shows the exact same value for Mexico of $2.23

 

I first wrote about the Big Mac Index in a blog to my real estate clients in 2009. At that time the US Big Mac was $3.57 and the Big Mac in Mexico was $2.39. Due to the huge drop in the value of the Mexican peso, it is now an even better time to visit or move to Mexico.

Some of the other Big Mac values in January 2017 were:  Argentina $3.47, Canada $4.51, Colombia $3.31, Costa Rica $4.06, Peru $3.24, and Uruguay $4.35. If you are in any other country, just go to the nearest McDonald’s and you should be able to get an idea of your purchasing power.

 

No wonder so many people want to retire in Mexico.

 

---