The Big Mac Index turns 40, with a surprising chapter involving Guillermo Moreno in Argentina

Two beef patties, lettuce, onions, pickles and a special sauce on a sesame-seed bun became the unlikely basis for one of economics’ most recognizable comparisons. Forty years ago, The Economist turned the Big Mac into a tool for comparing prices and currency valuations around the world.

The British magazine published the first Big Mac Index on September 6, 1986. Journalist Pam Woodall created it to illustrate the theory of purchasing power parity, which holds that exchange rates should eventually move toward levels that equalize the prices of the same basket of goods and services in different countries.

The first edition listed prices in 16 countries. A Big Mac cost $1.60 in the United States, while South America had only one representative, Brazil and its cruzeiro. The list also included currencies that no longer exist, such as the franc, peseta and German mark. The index later expanded, and its latest edition covers 54 currencies with updates twice a year.

The way the data is gathered has changed too. In the early editions, The Economist’s correspondents visited McDonald’s restaurants and collected prices themselves. Today, McDonald’s officially reports the figures, which the magazine’s journalists then process.

Henry Curr, The Economist’s economics editor, attributes the index’s durability to its simplicity and the hamburger’s global reach. “The Big Mac is a standardized product in many countries. It is a fairly good measure of local consumption, because it has commodity components, such as beef, lettuce and onions, but the price also implicitly includes the value of the restaurant’s rent and workers’ wages,” he told La Nación. The index accommodates regional differences as well. In India, cultural and religious considerations mean a chicken burger replaces the traditional beef version. Its Argentine history includes a controversial episode during Cristina Fernández de Kirchner’s second term, when Guillermo Moreno served as commerce secretary.

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The Big Mac is a standardized product in many countries. It is a fairly good measure of local consumption, because it has commodity components, such as beef, lettuce and onions, but the price also implicitly includes the value of the restaurant’s rent and workers’ wages