‘Big Mac Affordability’ and real-income inequality across countries

ABSTRACT

Using the Big Mac Index and focusing on the deciles of the income distribution, we produce a descriptive study of real-income inequality from households in 29 countries and for period 2000 to 2013. Using daily Big Mac Affordability (BMA), we rank and show differences in the living standards and the purchasing power of individuals belonging to different income deciles in these countries. We also provide a multidimensional Big Mac real-income inequality analysis by looking at Coefficient of Variation as well as the share of bottom to top decile BMA (as a measure of dispersion) across countries.

KEYWORDS:

• Big Mac Index
• affordability
• income inequality
• income distribution decile
• comparative country studies

JEL CLASSIFICATION:

• D31
• O57

Acknowledgments

We wish to thank Peyman Nayebvali for his valuable support throughout this research. We are grateful to the referee for insightful comments. Sincere thanks to Hyunsu Park for his diligent proofreading of this paper.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Data is available for 2002 for China, 2003 for Australia instead of 2004. Also, 2012 is available instead of 2013 for Mexico, Hungary and Slovenia..