iPad Purchasing Parity: Farewell to the Big Mac Index

Sandeep Mazumder

Economics Bulletin, 2016, vol. 36, issue 4, 2128-2136

Abstract: It has been 30 years since The Economist magazine launched its popular Big Mac index-a playful way to test the theory of purchasing power parity (PPP). In this light-hearted follow-up investigation on the use of a single product to test PPP, we present evidence that The Economist should now ditch Big Macs and instead turn to iPads. When using data on Apple's iPad tablet computer, we find that the international prices on this product conform much more closely to PPP than the Big Mac does. This is in turn driven by the tradable nature of iPads, unlike the Big Mac which is a perishable product. Thus it is time to bid farewell to the Big Mac index in its 30th year, and time to usher in an updated test of PPP, namely the iPad index.

Keywords: Purchasing power parity; Big Mac index. (search for similar items in EconPapers)
JEL-codes: F3 F4 (search for similar items in EconPapers)
Date: 2016-11-09
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Citations: View citations in EconPapers (1)

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