Index

Iceland \890
Norway \805
England \469
USA \400
Australia \345
Japan \280
I wonder if you can guess what prices those are. They are the prices of Big Mac.
Tokyo had long been considered as one of the most expensive cities in the world and most of the foreign people who had visited Japan told me the same. But every time I go abroad (Europe and USA) on business I cannot help being skeptical about that. Everything seemed so expensive. Food in restaurant, hotel charge, train tickets to name a few. Then I found myself checking the prices of hamburger at MacDonal's from time to time because I thought that hamburgers in fast food restaurants must be affordable for ordinary citizens and its price should represent a price that people feel reasonable. The surveillance supported my theory. Tokyo is not an expensive city any longer. I had also checked out the prices of Starbucks coffee and reached the same conclusion. Last year when I went to the US I decided that if we consider 1 dollar as 80 yen the prices were roughly the same.
Several months ago, I was very surprised to know there are actually such indexes as BigMac index or Tall-Latte index. They contrived a way to convert exchange rates from these indexes. If a BigMac is sold at $3.5 in US and \280 in Japan, the currency exchange rate should be 280/3.5 = 80 (yen / 1 dollar). I was perfectly right.
However prices are a bit more complicated than simply guessed from those popular commodities. When you go to a supermarket and compare the prices of meat, it should be, say, 200 yen / dollar or so. But overall BigMac index is right.
It is, I feel, also an index of richness. Whenever I go to Zurich office in Switzerland, I see people come to the office in the morning with a cup of Starbucks cafe they bought on their way. I was surprised because a cup of Tall-Latte cost about 700 yen and they can have free cups of coffee in the office brewed from coffee beans by a coffee machine (it is really good, I love it). Who in Japan can afford to buy a cup of take-out coffee for that money? In a way they are rich. In other words Yen is cheap and Swiss Franc is appreciated. This is what currency value means. Yen is weak. It means Japan is economically getting weaker without our knowing it so much.
The list of the prices of BigMac may show the order of richness. We are not living in a richest country any more. Japan is ranked low. But....is it really a bad thing?