Yes, you read that right: The mighty Big Mac can tell us a lot about a country's economy. At least that was the idea The Economist magazine had when they introduced the Big Mac Index in 1986 to convey country-by-country consumer purchasing power.
The Big Mac Index was originally cooked up (yes, pun intended) as a generally good-natured way of comparing the Purchasing-Power Parity (PPP) of different countries. Basically, the theory behind PPP is that, over time, the price of a given “basket” of similar goods in any two countries will tend to equalize - in this case that 'basket' is a burger- and the more equalized the basket price is, the more parity between countries.
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The latest data from the Big Mac Index provides ample proof of that. In the middle of the spectrum, we have the home of the Big Mac, the USA, where one of these iconic burgers costs USD $5.30.
On the expensive side of things, a Big Mac will run you $6.82 in Switzerland. On the other side of the spectrum, a Big Mac in Ukraine only costs $1.67. I can hear The Hamburglar boarding the next plane to Kiev as we speak. While the Big Mac can't provide a magical explanation of how the entire world economy works, it does provide a good foundation to begin investigating what's happening in a country's economy, as it has become a regular purchased commodity around the globe. Let's look at two examples.
Switzerland
Just why is a Big Mac so expensive in Switzerland? The answer just may lie in one of the things Switzerland is best known for. If you guessed chocolate, you'd be wrong. Nice try though. Switzerland is an expensive place to live. Due to their relatively higher standard of living, which is paid for through higher wages and taxes, many commodities and services are priced much higher, and Big Macs are no exception. Before you start feeling sorry for the Swiss, you should consider that, because of their high standard of living, they're some of the happiest and healthiest people in the world. They also enjoy an employment rate of over 80%, and a life expectancy of 83 years, both of which are well above global averages, and even averages for developed countries.
Ukraine
Ukraine is home of the world's cheapest Big Mac, with each sandwich costing only $1.67 US dollars. By the logic of the Big Mac index, this would mean that the currency used in Ukraine, the Ukrainian hryvnia, is quite undervalued.
Big Macs: What Does the Future Have in Store?
As unstable as global economics have been in recent years, it's really a toss-up as to what could happen next. If the US economy spirals into another tailspin, the prices of American Big Macs may experience wild, Venezuelan-like swings. On the other hand, if the global economy becomes more stable, we may come to see a world where the Big Mac is as equally affordable as it is uniformly created all around the world. I'd definitely have some fries with that.
Big Mac Index - Prices Around The World
| Rank | Country | Big Mac Price in US Dollars |
|---|---|---|
| 1 | Switzerland | 6.8 |
| 2 | Norway | 6.2 |
| 3 | Sweden | 6.1 |
| 4 | Finland | 5.6 |
| 5 | United States | 5.3 |
| 6 | Canada | 5.3 |
| 7 | France | 5.1 |
| 8 | Italy | 5.1 |
| 9 | Brazil | 5.1 |
| 10 | Belgium | 5.0 |
| 11 | Ireland | 5.0 |
| 12 | Denmark | 4.9 |
| 13 | Uruguay | 4.9 |
| 14 | Euro area | 4.8 |
| 15 | Spain | 4.8 |
| 16 | Israel | 4.8 |
| 17 | Germany | 4.8 |
| 18 | Australia | 4.7 |
| 19 | Netherlands | 4.5 |
| 20 | New Zealand | 4.5 |
| 21 | Britain | 4.4 |
| 22 | Singapore | 4.4 |
| 23 | Chile | 4.3 |
| 24 | Austria | 4.2 |
| 25 | South Korea | 4.1 |
| 26 | Greece | 4.1 |
| 27 | Costa Rica | 4.0 |
| 28 | Argentina | 4.0 |
| 29 | Portugal | 3.9 |
| 30 | Estonia | 3.9 |
| 31 | Colombia | 3.8 |
| 32 | UAE | 3.8 |
| 33 | Czech Republic | 3.8 |
| 34 | Sri Lanka | 3.8 |
| 35 | Thailand | 3.7 |
| 36 | Japan | 3.4 |
| 37 | Lithuania | 3.4 |
| 38 | Hungary | 3.4 |
| 39 | Pakistan | 3.4 |
| 40 | Latvia | 3.3 |
| 41 | Peru | 3.3 |
| 42 | Saudi Arabia | 3.2 |
| 43 | China | 3.2 |
| 44 | Poland | 3.0 |
| 45 | Vietnam | 2.9 |
| 46 | Turkey | 2.8 |
| 47 | India | 2.8 |
| 48 | Indonesia | 2.7 |
| 49 | Philippines | 2.6 |
| 50 | Hong Kong | 2.6 |
| 51 | Mexico | 2.6 |
| 52 | South Africa | 2.4 |
| 53 | Taiwan | 2.3 |
| 54 | Russia | 2.3 |
| 55 | Malaysia | 2.3 |
| 56 | Egypt | 1.9 |
| 57 | Ukraine | 1.6 |
If you're in the market for a new computer, the choices might seem overwhelming. You're faced with so many options, including what kind of processor you need, how big of a hard drive to get, the amount of RAM required, which screen resolution is best and so much more. There's a lot to consider when buying something you'll probably use most often to send e-mail, look at photos of your friends and check Facebook.
The first major decision most people make when purchasing a new computer is whether to buy a Mac or a PC. The two computers can seem a world apart, and both have diehard fans willing to defend their favorite's qualities. But have you ever noticed that Macs seem much more expensive than PCs? After all, you can walk into a computer store right now and walk out with a brand new PC for around $300. If you were shopping for a Mac, on the other hand, it would be impossible to spend less than $1,000.
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So what's the deal with Mac pricing? Are they really more expensive than PCs?
Mac Cosmetic
As it turns out, there isn't much of a price difference between comparable Macs and PCs. If you built a PC to match what a baseline Mac offers -- with similar hardware, equivalent software, and all of the bells and whistles that come standard on a Mac -- you'd actually be looking at two similarly priced computers [source: McCracken]. One company -- Tom's Hardware -- wanted to see if there was really a price difference. It built a PC to match the specs of a base model Mac Pro and found the price difference to be less than $6 [source: Nguyen].
So if Macs aren't more expensive than their PC counterparts, why can't you go out today and buy a Mac for a few hundred dollars? A lot of the price difference comes down to options and perceptions.
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A big difference between Apple and most PC makers is that Apple carries a relatively limited product line. At any given point, Apple offers only around five computer models. If you walked into a store that sells PCs, on the other hand, you'd have a much wider selection. And Apple's cheapest computer is still several hundred dollars more than the least expensive PC you can find.
For example, if you are in the market for a new laptop, the lowest-priced Mac starts at around $1,000, but you can get a small, base-model PC laptop for less than $500 or a desktop for around $300. But the two computers aren't the same: The $1,000 Apple is a higher quality computer with more bells and whistles than the least-expensive PC on the market. In other words, Mac doesn't really offer an economy-priced option.
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With its smaller selection of computers, Apple also offers very few mid-range models, so the price jump between models can seem substantial [source: Finnie]. With PCs, however, you can customize your computer with as many or as few options as you want, which allows you to adjust the features to meet your price point. Plus, there are simply more PC manufacturers and only one Apple, meaning the PC market is more competitive, which leads to both cost savings and a wider selection for the consumer.
Another difference between the two computers' hardware is PCs are designed to be upgraded. If you buy a base model PC today, you can add more memory, a better graphics card and a whole host of hardware options at a later date. Macs, on the other hand, aren't meant to be modified, although you can add RAM when necessary. For most people, the need to expand and modify their computer isn't a concern, but for serious gamers and techies, not being able to tweak their computer can be a big drawback.
There are some advantages to Apple's limited product line. The fact that there is only one maker of Macs and that they're designed so they can't be modified in any major way ensures a high-quality, efficient operating system. As a result, the Mac operating system is typically more stable than Windows; it runs faster and crashes less often [source: Stein]. Computer repairs are typically easier, as well, since Apple has to work on just a handful of models.
Macs Cost Share Program
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Today, most software you can buy for a computer is available in Mac-compatible and PC-compatible versions. So if you're planning to buy a computer, software availability isn't really a factor. What is a factor, however, is the software that comes standard on most Macs. Even base model Macs come loaded with great, high-quality programs -- iTunes, iMovie, iLife, Safari, iCalendar, Garage Band -- whereas a base model PC can either be pretty bare or overloaded with a bunch of programs you don't need or want [source: Finnie].
But you can't buy a Mac that's bare minimum like you can for a PC, because what comes standard on a Mac is essentially non-negotiable. In other words, you can't pick and choose the software your Mac comes with. There's no lowering the price by saying, for instance, 'I don't want Garage Band.' And with premium software by default, it's easy to see why the base model Mac sports a higher price tag than a basic PC.
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PC software, however, is totally customizable and you can pick and choose what you want in order to get to a price you're happy with. But adding and expanding software can be expensive, too. If you add the same high-quality software and multimedia tools to a base-model PC that comes standard on a Mac, the cost of that PC would jump [source: Hesseldahl]. Plus, you'll need to invest in good antivirus software if you purchase a PC, which is another factor that can ratchet up the price [source: Hesseldahl].
A final software advantage Macs have is that everything they run is automatically compatible with other Apple products -- so you can sync your iPod or iPhone with your computer hassle-free thanks to the standard software on the Mac computer and your other Apple devices. For some, this cross-device compatibility is an incentive to pay a little more for a Mac.
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Part of the appeal of, and the reason people will pay more for a Mac is the reputation. The design is sleek, the product is trendy and Macs have a reputation for being the go-to computers of artists, musicians and designers. Apple has managed to develop a product that people see as stylish, and as a result its market share has grown steadily year after year.
But it's not just about the look and the trends, though both have helped Apple carve out its niche in the computer market. Apple is also known for excellent customer service, with retail stores staffed by knowledgeable employees and tech support that's efficient and effective [source: Apple]. Year after year Apple beats PC makers in consumer satisfaction ratings -- and a lot of factors go into that rating beyond just quality of product, including its excellent customer service and a great buying experience [source: Ogg]. And for some, having the assurance of good support makes it worth shelling out the extra cash to own a Mac.
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Some people also think Macs are easier to use than PCs. While that sentiment can vary from person to person, there's no doubt the user interface between the two operating systems is very different. In reality it all comes down to personal preference; there's no hard evidence to say one interface is easier to use than the other.
And let's not forget the role that advertising plays in our perceptions of Macs and PCs. Apple has focused much of its advertising dollars on portraying Mac users as young, creative trend-setters. PC makers, on the other hand, have tended to focus on competitive pricing and flexibility of options [source: Hesseldahl]. Apple hasn't made pricing its focus, so it's not surprising many people have the impression that, when matched head-to-head, a Mac costs more than a PC.
There's certainly a lot that goes into deciding what computer to buy, and a lot of information available to help you make your decision. To learn more about PCs, Macs and computers in general, take a look at the links on the next page.
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Sources
How Much Is A Macbook Laptop
- Apple. 'Better Support.' (Aug. 4, 2011). http://www.apple.com/why-mac/better-support/
- Derene, Glenn. 'Mac vs. PC: The Ultimate Lab Test for New Desktops & Laptops.' Popular Mechanics, December 18, 2009. (Aug. 8, 2011). http://www.popularmechanics.com/technology/gadgets/tests/4258725
- Finnie, Scot. 'Mac vs. PC cost analysis: How does it all add up?' Computerworld, June 8, 2007. (Aug. 6, 2011). http://www.computerworld.com/s/article/9023959/Mac_vs._PC_cost_analysis_How_does_it_all_add_up_
- Hesseldahl, Arik. 'Mac vs. PC: What You Don't Get for $699.' Bloomberg Businessweek, April 15, 2009. (Aug. 6, 2011). http://www.businessweek.com/technology/content/apr2009/tc20090415_602968.htm
- Intel. 'PC vs. Mac: The Big Debate.' (Aug. 14, 2011). http://www.intel.com/content/www/us/en/tech-tips-and-tricks/pc-vs-mac-the-big-debate.html
- McCracken, Harry. 'PC vs. Mac: The Straight Scoop.' FOXNews, Feb. 23, 2010. (Aug. 12, 2011). http://www.foxnews.com/scitech/2010/02/23/pc-vs-mac-the-straight-scoop/
- Nguyen, Tuan. 'We Build a PC to Match a Baseline Mac Pro.' Tom's Hardware, August 4, 2009. (Aug. 14, 2011). http://www.tomshardware.com/reviews/apple-mac-leopard-windows-vista,1985-2.html
- Ogg, Stephanie. 'ecrets of Apple's Customer Success.' CNET, Sept. 20, 2010. (Aug. 12, 2011). http://news.cnet.com/8301-31021_3-20017064-260.html
- Stein, Scott. '7 Mac Myths Debunked (or Proven!)' LAPTOP, April 10, 2009. (Aug. 6, 2011). http://www.laptopmag.com/mobile-life/mac-myths-debunked.aspx
- Suarez, Paul. 'Mac vs. PC: Stereotypes Confirmed.' PCWorld, April 23, 2011. (Aug. 14, 2011). http://www.pcworld.com/article/226150/mac_vs_pc_stereotypes_confirmed.html