We hear a lot about people who live on “less than a dollar a day.” But a dollar buys a lot more in some countries than it does in others. That’s why some economists believe a better way of understanding the relative income of people around the world is through something called Purchasing Power Parity.
A simple way of understanding this concept is through the words of BBC Reporter Mukul Devichand, who explains how the “Big Mac Index” — first coined by The Economist — is a good way of understanding price differences between countries.
The idea, says former World Bank economist Michael Ward, is that the Big Mac is an almost identical product no matter where in the world you buy it — bread, cheese, meat, lettuce and labour costs. But in fact, Big Macs end up costing much less in places like Beijing or Mumbai than London or New York.
So economists use the different prices of Big Macs across the world to judge the relative buying power of people in different countries. For example, if a Big Mac costs a dollar in America, but only 25 cents in Mumbai, then a PPP "dollar" in Mumbai is actually worth only 25 cents.
It’s a good idea to keep the dollar’s relative worth in mind when checking out the portfolio of pictures on onedollaroneday.org, sponsored by our sister site Global Citizen Corps. The site is challenging its visitors to submit photos that answer the question, “What can you eat on a dollar a day?”
With Global Citizen Corps’ global audience, it’ll be interesting to see how submissions from the U.S. differ from those from, say, Spain or Syria or Sudan.
Students aged 14-25 can register with Global Citizen Corps and submit their photo on flickr.com. The grand prize is a digital camera, with Amazon.com gift cards for second and third place. The deadline is August 20.