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Monday, October 18, 2004

Billynomics

The big mac index is a currency index by the economist that tries to calculate which currencies are over and undervalued by looking at the prices of big macs in the respective countries. Countries where big macs are more expensive have overvalued currencies, countries where big macs are cheaper have undervalued currencies.


The economist is only half joking with this. Other approaches usually take a basket of goods and services and add them up. But the big mac can be seen as such a basket and McDonalds has already done the counting. But the big mac is just one universally available product. While shopping for furniture I realized the Billy of Ikea might be perfect example too.


Life in Switzerland is expensive, but is Ikea more expensive too? In which country is Ikea the cheapest? As it turns out, Ikea uses one application for all countries and replacing the countryId in the url with a different number will give you the shop and prices for the different country. Add productId=15559 and you'll see how much a Billy is in that country.


I extracted information from 12 countries and got the following result:




































































































CountryLocal PriceCurrencyprice dollarsPrice Level
Germany350.8$43.75-24.73%
France390.8$48.75-16.13%
Austria390.8$48.75-16.13%
Denmark2995.95$50.25-13.54%
Sweden3997.27$54.88-5.58%
Switzerland691.23$56.10-3.49%
Netherlands450.8$56.25-3.23%
Italy450.8$56.25-3.23%
Spain450.8$56.25-3.23%
Finland450.8$56.25-3.23%
Belgium46.50.8$58.130.00%
US591$59.001.51%
Canada751.255$59.762.81%
UK350.556$62.958.30%


Rip-off Brittain anyone? As you see, Switzerland isn't so bad, even a little cheaper than my native Netherlands.


Apart from price differences, I think the chart can be read differently too. Namely, how respected is Ikea in each country. The more respected, the more they can charge for the same thing. As it happens, the same thing is true for burgers too. In some countries Big Macs are thought of something special, which makes them expensive.

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