Terms of trade

Well-offness is hard to measure. Economists and many others have tried but all manageable indices are bound to fall short. Census income comparisons have well known shortcomings and the BLS has recently taken to making consumer expenditure comparisons (tanks, Ted Balaker).

Cox and Alm (1999) provided many illuminating examples of what an average worker could buy per hour of work, now vs. a hundred years ago, etc. And guess what? We are better off now!

Last week, The Economist published the UBS international index of how long an average worker has to toil to buy a Big Mac. This is an elaboration of the magazine's well known Big Mac Index (see chart), which offers a rough measure of international comparative purchasing power. This latest version divides the local price of a Big Mac by the local average hourly wage.

Tokyo workers have the most Big Mac purchasing power in the world, better than their New York counterparts. Terms of trade, indeed!