The Big Mac hamburger : is it used to communicate a distorted media message?

Abstract

For more than a decade the Big Mac index has served as a guide to the layman as to whether currencies are at their ‘correct’ exchange rate level. This article compares the postal rate of a standard letter in South Africa, relative to other selected countries, based on the Big Mac purchasing-power parity. It provides a theoretical overview of the Big Mac Index, its application and shortcomings. The findings indicate that government, private companies and labor unions should be very cautious when using only the Big Mac Index for comparison purposes. It may be concluded that when the Big Mac hamburger is used to compare and determine the relative value of postal rates between South Africa and the rest of the world, a distorted message is communicated. AFRIKAANS: Vir meer as ‘n dekade het die Big Mac indeks as riglyn vir die alleman gedien om te bepaal of geldeenhede op die ‘korrekte’ wisselkoersvlak is. Die artikel vergelyk die postarief van ‘n standaard brief in Suid-Afrika, relatief tot dié van ander lande, gebaseer op die die Big Mac koopkragpariteit. Dit omvat ‘n teoretiese oorsig van die Big Mac indeks, ‘n toepassing asook tekortkominge daarvan. Die bevindinge dui aan dat die owerheid, private ondernemings en vakbonde baie versigtig te werk moet gaan wanneer alleenlik die Big Mac indeks vir vergelykingsdoeleindes gebruik word. Die gevolgtrekking is dat indien die Big Mac hamburger gebruik word om die relatiewe waarde van postariewe tussen Suid-Afrika en die res van die wêreld te vergelyk en te bepaal, ‘n verwronge boodskap gekommunikeer word.