Chand Arora.com

When The Economist introduced its Big Mac Index 35 years ago, the ubiquitous McDonald’s hamburger cost just $1.60 in America. Now it costs $5.65, according to an average of prices in four cities. The increase comfortably outstrips inflation over the same period.

Indeed, the Big Mac’s birthplace is one of the priciest places to buy it, according to our comparison of over 70 countries around the world. In Vietnam, for example, the burger costs 69,000 dong. Although that sounds like an awful lot, you can get a lot of dong for your dollar and, therefore, a lot of bang for your buck in Vietnam. You can buy 69,000 dong for only $3 on the foreign-exchange market. And so a Big Mac in Vietnam works out to be 47% cheaper than in America.

Good to know. But the index was intended not as a shopper’s guide to burgers but as a tongue-in-cheek guide to currencies. In principle, the value of a currency should reflect its power to buy things, according to the doctrine of “purchasing-power parity”, a term coined by Gustav Cassel, a Swedish economist, in 1918. Since 69,000 dong and $5.65 have the same power to buy a burger, they should be worth the same amount. The fact that you can buy a burger’s worth of dong for 47% less than a burger’s worth of dollars suggests the dong is undervalued