Big Mac Index Turns 40: Taiwan's Price Ranks Second Cheapest Globally

The Big Mac Index, created in 1986 by Pam Woodall, has celebrated its 40th anniversary as an iconic measure of global purchasing power parity. According to the latest data, a single Big Mac in Taiwan costs NT$78, approximately $2.42, ranking second cheapest globally after Indonesia's price of around $2.38 (about NT$77). The New Taiwan Dollar is undervalued by more than 60% against the U.S. Dollar based on PPP theory, with an implied exchange rate of NT$12.51 per U.S. Dollar.

However, experts warn that this does not necessarily mean the currency will appreciate by 60%. Simon Cox, author of the cover story, noted that while the Big Mac Index offers some clues about exchange rate direction, its predictions are 'sometimes right, sometimes wrong.'

The Economist emphasizes that a significant portion of burger price differences across countries stems from local costs that cannot be traded across borders. In Switzerland's case, for example, beef prices are approximately 2.7 times those in Taiwan, and store rents exceed three times the level.