Every so often the UK-based magazine the Economist publishes a partially tongue-in-cheek economic “statistic” called the Big Mac index. This measures the ratio of a country’s currency to the US dollar vs. the ratio between price of a McDonald’s Big Mac in the country and the price of a Big Mac in the United States. The percentage difference between the two ratios is reported and, assuming that costs in each country are stable, indicates whether the country’s currency is undervalued or overvalued against the US dollar. Whew!
The Economist published its latest Big Mac index on July 24th. This week, they published a correction, the last sentence of which is particularly recommended for consumption by the discerning reader:
Correction: Burger-lovers in Argentina were enjoying a special discount on Big Macs when we collected data for our index (July 24, 2010). At normal prices the peso is undervalued by 5%, not 52%. Sorry for the whopper.