The Big Mac Index - Applying Simple Economic Common Sense. Simple ”quick and dirty” economic modeling can give powerful insight The Economist’s Big Mac Index has traditionally been thought of as an interesting yet dubious proxy for currency valuations and purchasing power. Mcdonald’s has a vast array of branches worldwide.
Next to the Cola companies Mcdonald’s has, what might be, the most widely distributed common product worldwide: The Big Mac. The Economist thus ingeniously constructed the Big Mac Index which is a simplified model of purchasing power and currency value. The most beautiful economic models are very simple yet generate very interesting insights. The economic sense behind the Big Mac Index – Purchasing Power Parity Purchasing power parity, also known as PPP is a broadly used economic concept. The Big Mac is an ideal example for a sold good which should be priced the same in the many different countries it is sold in.
Purchasing power parity is most commonly used in comparing living standards in different countries. 15 Fascinating TED Talks for Econ Geeks. If you dream of a career in accounting, economics or finance, there’s a pretty good chance you love learning more about the global economy, monetary decision-making and other fiscal topics. Through these talks, you’ll get to hear some of the world’s foremost experts on behavior, economics, and politics discuss a wide range of issues, from inequality to consumerism– often with an interesting and unique take on the subject matter that’s perfect for stimulating your inner (and not-so-inner) geek. Loretta Napoleoni: The intricate economics of terrorism: You might be surprised at the economic and political issues that go on behind terrorist organizations.
Mind the Gap. May 2004 When people care enough about something to do it well, those who do it best tend to be far better than everyone else. There's a huge gap between Leonardo and second-rate contemporaries like Borgognone. You see the same gap between Raymond Chandler and the average writer of detective novels. A top-ranked professional chess player could play ten thousand games against an ordinary club player without losing once. Like chess or painting or writing novels, making money is a very specialized skill. But for some reason we treat this skill differently. Why? I think there are three reasons we treat making money as different: the misleading model of wealth we learn as children; the disreputable way in which, till recently, most fortunes were accumulated; and the worry that great variations in income are somehow bad for society.
The Daddy Model of Wealth When I was five I thought electricity was created by electric sockets. In fact, wealth is not money. Where does wealth come from? Notes. Ten Recurring Economic Fallacies, 1774–2004 - H.A. Scott Trask. As an American historian who knows something of economic law, having learned from the Austrians, I became intrigued with how the United States had remained prosperous, its economy still so dynamic and productive, given the serious and recurring economic fallacies to which our top leaders (political, corporate, academic) have subscribed and from which they cannot seem to free themselves—and alas, keep passing down to the younger generation.
Let’s consider ten. Myth #1: The Broken Window One of the most persistent is that of the broken window—one breaks and this is celebrated as a boon to the economy: the window manufacturer gets an order; the hardware store sells a window; a carpenter is hired to install it; money circulates; jobs are created; the GDP goes up. In truth, of course, the economy is no better off at all. The fallacy lies in a failure to grasp what has been foregone by repair and reconstruction—the labor and capital expended, having been lost to new production.
They are wrong. The Economics of Seinfeld.