If you are looking to relocate within Asia and are concerned about how much bang you can get from your buck turn to Burgernomics. Invented by The Economist magazine in 1986, Burgernomics is a modern, fast food version to calculate the purchasing power parity (PPP) of a nation. The informal theory uses a common standard, the McDonald’s Big Mac burger whose price varies according to a country’s cost of living.
Economists prefer comparing two country’s PPP’s because PPP takes into account the relative cost of living and the inflation rates of different countries, rather than just a nominal GDP comparison.
According to the latest statistics released by the Economist, Malaysia is the most cost effective country to live in, in Asia. A big Mac in Kuala Lampur costs only US$1.70, while it costs more than double that to buy a big mac in the U.S..
The Big mac Index is also effective in comparing currencies and explaining Asia’s export boom. According to the chart, the Chinese yuan is one of the most undervalued currencies trading at 48.7 percent below its PPP rate. Similarly, the Russian ruble is trading at 29 percent below its PPP rate. Keeping a currency undervalued aids exporters, a reason most economists attribute to Asia’s export boom.
