May

16

 Placed Insights calculates that people in America eat 17 Big Macs a second, 1,020 a minute, 61,200 an hour, 1,468,800 each day and 536,112,000 a year; this amounts to $2.4 billion in annual revenue from bread, beef, pickles, cheese and ketchup for the McDonalds corporation and its franchisees.


Dunn Warren Investment Advisors
thinks the Big Mac is a better measure of "inflation" (yet another word, like capitalism, that describes a real thing by giving it a unicorn label) than the C.P.I. A CFA at that firm, James Cornehisen has, with the help of his assistant, regularly tallied the price of a Big Mac at 30 McDonalds restaurants throughout the U.S. They find that the current price of the hamburger ranges from $3.78 to $5.28 with the average price being $4.45. This is an increase of 9 cents from what they found to be the average price January 2014 - a rise of 2%. However, the current average price is a drop of 11 cents (a decrease of 2.4%) from the average price in May 2013 which was $4.56.

Rocky Humbert writes:

The Economist's Big Mac Index has caused indigestion for foreign currency traders for many years.

The Big Mac Index might work a bit better to demonstrate regional differences in the cost of living within the USA. But as a general indicator of price, it suffers for the substitution problem. (That is, if the price of beef rises, people will switch to chicken.) It also assumes the premise that McDonald's has a fixed profit margin on Big Macs.

But fortunately (or last I checked) there are no hedonic adjustments necessary for 2 all beef patties, special sauce, lettuce, cheese, pickles, onions on a sesame seed bun." (Any speclister who has no idea what I just wrote has not done enough backtesting on their trading models.)
 


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