<ul>
<li>Fast food consumption can be used as an index to measure consumer behaviour and market changes.</li>
<li>The Pizza Principle, first noticed in New York City in the 80s, revealed that the cost of a subway ride and a slice of pizza remained the same for two decades.</li>
<li>How much a Big Mac from Mcdonalds (or a similar offering from KFC) costs around the world can measure how the same product costs in different countries. If the product price is the same, the countries have a Purchasing Power Parity (PPP).</li>
</ul>

The Pizza Principle: Linking Fast Food With The Economy

Money & Investments

Financial experts and economists use popular food items like the Mars chocolate bars, popcorn, and baked beans as an index to measure the cost of living and to determine the health of the economy.
The Odeon Popcorn index(2009), for instance, showed that higher sales of popcorn, a cheap snack consumed by families, correlated with the economic recovery in the United Kingdom after the financial crisis of 2008.

Chocolates, Popcorn And Economics

Sales of french fries and the export of main raw materials (potatoes and oil) is an economic indicator of the trade between the US and Asia.
The length of the menu at various cheap snack joints like Waffle House are an indicator of the condition of food supplies, electricity and other variables that provide key information on the country’s economic health.

Consumption Of French Fries And Global Economy

<div><a rel="">By Chris Baraniuk</a></div><div>2nd February 2017</div><div>From the Pizza Principle to the Waffle House Index, fast food can reveal surprising things about our behaviour and hidden changes in the market.</div>Article continues below<div>W</div>What is an economist’s favourite food? Burgers, chips and pizza might not immediately come to mind – but the consumption of meals like these can signal changes in people’s economic behaviour. Knowing the price of pizza in New York or the cost of a Big Mac in Beirut can tell market-watchers how the world’s cogs are turning.&nbsp;THE PIZZA PRINCIPLEIn 1980, a New Yorker called Eric Bram noticed that the price of a slice of pizza had matched the cost of a subway ride in the city for nearly 20 years. More recently, commentators have noticed that as the cost of pizza goes up, <a href="http://select.nytimes.com/2007/07/27/nyregion/27nyc.html" dir="ltr">transit fares</a> often follow. In 2014, data scientist Jared Lander investigated the principle and found that <a href="http://www.jaredlander.com/2014/05/average-cost-of-a-new-york-slice-in-2014/" dir="ltr">it remains in place</a>. Why is this so? Nobody knows.THE BIG MAC AND KFC INDICES<picture><source media="(min-width:1200px)" srcset="https://ychef.files.bbci.co.uk/1600x900/p04rp60f.webp" type="image/webp"><source media="(min-width:1200px)" srcset="https://ychef.files.bbci.co.uk/1600x900/p04rp60f.jpg" type="image/jpeg"><source media="(min-width:880px)" srcset="https://ychef.files.bbci.co.uk/1280x720/p04rp60f.webp" type="image/webp"><source media="(min-width:880px)" srcset="https://ychef.files.bbci.co.uk/1280x720/p04rp60f.jpg" type="image/jpeg"><source media="(min-width:576px)" srcset="https://ychef.files.bbci.co.uk/976x549/p04rp60f.webp" type="image/webp"><source media="(min-width:576px)" srcset="https://ychef.files.bbci.co.uk/976x549/p04rp60f.jpg" type="image/jpeg"><source media="(min-width:224px)" srcset="https://ychef.files.bbci.co.uk/624x351/p04rp60f.webp" type="image/webp"><source media="(min-width:224px)" srcset="https://ychef.files.bbci.co.uk/624x351/p04rp60f.jpg" type="image/jpeg"><img title="The price of a Big Mac says a lot about “purchasing power parity&quot; – whether exchange rates mean that a product costs the same in different countries (Credit: Getty Images)" src="https://ychef.files.bbci.co.uk/976x549/p04rp60f.jpg" alt="The price of a Big Mac says a lot about “purchasing power parity&quot; – whether exchange rates mean that a product costs the same in different countries (Credit: Getty Images)" width="687" height="386"></picture>The price of a Big Mac says a lot about “purchasing power parity" – whether exchange rates mean that a product costs the same in different countries (Credit: Getty Images)How much will a Big Mac cost you in Lima? Or Abu Dhabi? The answers can tell you a lot about “purchasing power parity (PPP)” – whether exchange rates mean that a product costs the same in different countries. A tool to make this theory more “digestible” was <a href="http://www.economist.com/content/big-mac-index" dir="ltr">launched by The Economist</a> in 1986. It allows comparison of several base currencies to others around the world. As <a href="http://www.economist.com/news/finance-and-economics/21714392-emerging-market-currencies-and-euro-look-undervalued-against-dollar-our-big?fsrc=scn/tw/te/rfd/pe" dir="ltr">they wrote this month</a>: “A Big Mac currently costs $5.06 in America but just 10.75 lira ($2.75) in Turkey, implying that the lira is undervalued.”Since McDonald’s restaurants aren’t so common in Africa, the market research firm Sagaci Research invented the supplementary “<a href="http://sagaciresearch.com/kfcindex/" dir="ltr">KFC index</a>” to analyse PPP there.MARS BARSIn 1932, a factory in Slough produced the world’s first Mars bar. Fifty years later, Financial Times writer Nico Colchester pointed out that the price of the confectionary in Britain was neatly correlated with the <a href="http://www.ft.com/cms/s/2/9f128868-68b4-11da-bd30-0000779e2340.html?ft_site=falcon&amp;desktop=true#axzz4M7eB5hqW" dir="ltr">buying power of pound sterling</a>. By measuring the cost of things in Mars Bars, Colechester noted how graduate salaries had improved slightly in 40 years. Meanwhile, train fares had become cheaper but roast beef dinners in pubs had gone up by more than 60%.BAKED BEANS AND POPCORN<picture><source media="(min-width:1200px)" srcset="https://ychef.files.bbci.co.uk/1600x900/p04rprk5.webp" type="image/webp"><source media="(min-width:1200px)" srcset="https://ychef.files.bbci.co.uk/1600x900/p04rprk5.jpg" type="image/jpeg"><source media="(min-width:880px)" srcset="https://ychef.files.bbci.co.uk/1280x720/p04rprk5.webp" type="image/webp"><source media="(min-width:880px)" srcset="https://ychef.files.bbci.co.uk/1280x720/p04rprk5.jpg" type="image/jpeg"><source media="(min-width:576px)" srcset="https://ychef.files.bbci.co.uk/976x549/p04rprk5.webp" type="image/webp"><source media="(min-width:576px)" srcset="https://ychef.files.bbci.co.uk/976x549/p04rprk5.jpg" type="image/jpeg"><source media="(min-width:224px)" srcset="https://ychef.files.bbci.co.uk/624x351/p04rprk5.webp" type="image/webp"><source media="(min-width:224px)" srcset="https://ychef.files.bbci.co.uk/624x351/p04rprk5.jpg" type="image/jpeg"><img title="Higher sales of popcorn in cinemas was taken as a sign of economic recovery in Britain following the financial crisis of 2008 (Credit: Getty Images)" src="https://ychef.files.bbci.co.uk/976x549/p04rprk5.jpg" alt="Higher sales of popcorn in cinemas was taken as a sign of economic recovery in Britain following the financial crisis of 2008 (Credit: Getty Images)" width="687" height="386"></picture>Higher sales of popcorn in cinemas was taken as a sign of economic recovery in Britain following the financial crisis of 2008 (Credit: Getty Images)When financial experts are trying to determine whether an economy is generally in good health, they often look to food products. In 2009, the Odeon cinema company announced an “<a href="http://www.thisismoney.co.uk/money/news/article-1679109/Popcorn-index-shows-economy-on-mend.html" dir="ltr">Odeon Popcorn Index</a>” that it claimed showed higher sales and therefore signs of economic recovery in Britain following the financial crisis of 2008. And analysts have also <a href="http://news.bbc.co.uk/1/hi/business/8058987.stm" dir="ltr">scrutinised sales of baked beans</a>, popular when times are tough, as an indicator of how people are responding to periods of economic decline. When <a href="http://money.aol.co.uk/2013/12/24/haz-beanz-baked-beans-sales-fall/" dir="ltr">baked bean sales fell in 2013</a>, some took it as a sign that the UK economy was in rude health.FRENCH FRIESA fascinating article in the Oregonian in 1998 observed that sales of French fries could be a helpful <a href="http://www.oregonlive.com/editors/index.ssf/2013/04/the_french_fry_connection.html" dir="ltr">indicator of trade between America and Asia</a>. This food “leads US industries into foreign markets” wrote Richard Read, thanks to the fact that America exports so many of them (something <a href="http://www.fas.usda.gov/data/processed-product-spotlight-growth-exports-us-potato-products" dir="ltr">that remains true today</a>). And he added that consumption of French fries was also an indicator of how well-developed an Asian economy had become. This meant that when economic trouble in Asia was brewing in the late 90s, farmers in the US were hit hard.WAFFLE HOUSE INDEX<picture><source media="(min-width:1200px)" srcset="https://ychef.files.bbci.co.uk/1600x900/p04rns4k.webp" type="image/webp"><source media="(min-width:1200px)" srcset="https://ychef.files.bbci.co.uk/1600x900/p04rns4k.jpg" type="image/jpeg"><source media="(min-width:880px)" srcset="https://ychef.files.bbci.co.uk/1280x720/p04rns4k.webp" type="image/webp"><source media="(min-width:880px)" srcset="https://ychef.files.bbci.co.uk/1280x720/p04rns4k.jpg" type="image/jpeg"><source media="(min-width:576px)" srcset="https://ychef.files.bbci.co.uk/976x549/p04rns4k.webp" type="image/webp"><source media="(min-width:576px)" srcset="https://ychef.files.bbci.co.uk/976x549/p04rns4k.jpg" type="image/jpeg"><source media="(min-width:224px)" srcset="https://ychef.files.bbci.co.uk/624x351/p04rns4k.webp" type="image/webp"><source media="(min-width:224px)" srcset="https://ychef.files.bbci.co.uk/624x351/p04rns4k.jpg" type="image/jpeg"><img title="US authorities have used the length of the Waffle House menu to see if supplies at the restaurant are low after hurricanes (Credit: Flickr/Steve Snodgrass)" src="https://ychef.files.bbci.co.uk/976x549/p04rns4k.jpg" alt="US authorities have used the length of the Waffle House menu to see if supplies at the restaurant are low after hurricanes (Credit: Flickr/Steve Snodgrass)" width="687" height="386"></picture>US authorities have used the length of the Waffle House menu to see if supplies at the restaurant are low after hurricanes (Credit: Flickr/Steve Snodgrass)How bad was that hurricane? The length of a fast-food restaurant's menu can be a quick guide, it seems. The Federal Emergency Management Agency (FEMA) in the United States keeps a check on <a href="https://en.wikipedia.org/wiki/Waffle_House_Index" dir="ltr">the length of the menu at Waffle House outlets</a> in the aftermath of natural disasters. If customers are being offered a limited menu, food supplies at the restaurant may be low and it might only have generator power. If the restaurant is closed? “That’s really bad,” <a href="http://www.wsj.com/articles/SB10001424053111904716604576542460736605364" dir="ltr">FEMA Administrator Craig Fugate once said</a>.<img src="http://ichef.bbci.co.uk/images/ic/raw/p04jj4t7.jpg" width="592" height="59">Join 800,000+ Future fans by liking us on&nbsp;<a href="https://www.facebook.com/BBCFuture" dir="ltr">Facebook</a>, or follow us on&nbsp;<a href="https://twitter.com/bbc_future" dir="ltr">Twitter</a>,&nbsp;<a href="https://plus.google.com/107828172298602173375/posts" dir="ltr">Google+</a>,&nbsp;<a href="https://www.linkedin.com/company/bbc-com" dir="ltr">LinkedIn</a>&nbsp;and&nbsp;<a href="https://instagram.com/bbcfuture_official/" dir="ltr">Instagram</a>If you liked this story, <a href="http://pages.emails.bbc.com/subscribe/?ocid=fut.bbc.email.we.email-signup" dir="ltr">sign up for the weekly bbc.com features newsletter</a>, called “If You Only Read 6 Things This Week”. A handpicked selection of stories from BBC Future, Earth, Culture, Capital, Travel and Autos, delivered to your inbox every Friday.

From the Pizza Principle to the Waffle House Index, fast food can reveal surprising things about our behaviour and hidden changes in the market.

Money

What is an economist’s favourite food? Burgers, chips and pizza might not immediately come to mind – but the consumption of meals like these can signal changes in people’s economic behaviour. Knowing the price of pizza in New York or the cost of a Big Mac in Beirut can tell market-watchers how the world’s cogs are turning.

THE PIZZA PRINCIPLE

In 1980, a New Yorker called Eric Bram noticed that the price of a slice of pizza had matched the cost of a subway ride in the city for nearly 20 years. More recently, commentators have noticed that as the cost of pizza goes up, <a dir="ltr" href="http://select.nytimes.com/2007/07/27/nyregion/27nyc.html">transit fares </a>often follow. In 2014, data scientist Jared Lander investigated the principle and found that <a dir="ltr" href="http://www.jaredlander.com/2014/05/average-cost-of-a-new-york-slice-in-2014/">it remains in place </a>. Why is this so? Nobody knows.

THE BIG MAC AND KFC INDICES

The price of a Big Mac says a lot about “purchasing power parity" – whether exchange rates mean that a product costs the same in different countries (Credit: Getty Images)

How much will a Big Mac cost you in Lima? Or Abu Dhabi? The answers can tell you a lot about “purchasing power parity (PPP)” – whether exchange rates mean that a product costs the same in different countries. A tool to make this theory more “digestible” was <a dir="ltr" href="http://www.economist.com/content/big-mac-index">launched by The Economist </a>in 1986. It allows comparison of several base currencies to others around the world. As <a dir="ltr" href="http://www.economist.com/news/finance-and-economics/21714392-emerging-market-currencies-and-euro-look-undervalued-against-dollar-our-big?fsrc=scn/tw/te/rfd/pe">they wrote this month </a>: “A Big Mac currently costs $5.06 in America but just 10.75 lira ($2.75) in Turkey, implying that the lira is undervalued.”

Since McDonald’s restaurants aren’t so common in Africa, the market research firm Sagaci Research invented the supplementary “<a dir="ltr" href="http://sagaciresearch.com/kfcindex/">KFC index </a>” to analyse PPP there.

In 1932, a factory in Slough produced the world’s first Mars bar. Fifty years later, Financial Times writer Nico Colchester pointed out that the price of the confectionary in Britain was neatly correlated with the <a dir="ltr" href="http://www.ft.com/cms/s/2/9f128868-68b4-11da-bd30-0000779e2340.html?ft_site=falcon&amp;desktop=true#axzz4M7eB5hqW">buying power of pound sterling </a>. By measuring the cost of things in Mars Bars, Colechester noted how graduate salaries had improved slightly in 40 years. Meanwhile, train fares had become cheaper but roast beef dinners in pubs had gone up by more than 60%.

BAKED BEANS AND POPCORN

Higher sales of popcorn in cinemas was taken as a sign of economic recovery in Britain following the financial crisis of 2008 (Credit: Getty Images)

When financial experts are trying to determine whether an economy is generally in good health, they often look to food products. In 2009, the Odeon cinema company announced an “<a dir="ltr" href="http://www.thisismoney.co.uk/money/news/article-1679109/Popcorn-index-shows-economy-on-mend.html">Odeon Popcorn Index </a>” that it claimed showed higher sales and therefore signs of economic recovery in Britain following the financial crisis of 2008. And analysts have also <a dir="ltr" href="http://news.bbc.co.uk/1/hi/business/8058987.stm">scrutinised sales of baked beans </a>, popular when times are tough, as an indicator of how people are responding to periods of economic decline. When <a dir="ltr" href="http://money.aol.co.uk/2013/12/24/haz-beanz-baked-beans-sales-fall/">baked bean sales fell in 2013 </a>, some took it as a sign that the UK economy was in rude health.

A fascinating article in the Oregonian in 1998 observed that sales of French fries could be a helpful <a dir="ltr" href="http://www.oregonlive.com/editors/index.ssf/2013/04/the_french_fry_connection.html">indicator of trade between America and Asia </a>. This food “leads US industries into foreign markets” wrote Richard Read, thanks to the fact that America exports so many of them (something <a dir="ltr" href="http://www.fas.usda.gov/data/processed-product-spotlight-growth-exports-us-potato-products">that remains true today </a>). And he added that consumption of French fries was also an indicator of how well-developed an Asian economy had become. This meant that when economic trouble in Asia was brewing in the late 90s, farmers in the US were hit hard.

WAFFLE HOUSE INDEX

US authorities have used the length of the Waffle House menu to see if supplies at the restaurant are low after hurricanes (Credit: Flickr/Steve Snodgrass)

How bad was that hurricane? The length of a fast-food restaurant's menu can be a quick guide, it seems. The Federal Emergency Management Agency (FEMA) in the United States keeps a check on <a dir="ltr" href="https://en.wikipedia.org/wiki/Waffle_House_Index">the length of the menu at Waffle House outlets </a>in the aftermath of natural disasters. If customers are being offered a limited menu, food supplies at the restaurant may be low and it might only have generator power. If the restaurant is closed? “That’s really bad,” <a dir="ltr" href="http://www.wsj.com/articles/SB10001424053111904716604576542460736605364">FEMA Administrator Craig Fugate once said </a>.

Join 800,000+ Future fans by liking us on  <a dir="ltr" href="https://www.facebook.com/BBCFuture">Facebook </a>, or follow us on  <a dir="ltr" href="https://twitter.com/bbc_future">Twitter </a>,  <a dir="ltr" href="https://plus.google.com/107828172298602173375/posts">Google+ </a>,  <a dir="ltr" href="https://www.linkedin.com/company/bbc-com">LinkedIn </a> and  <a dir="ltr" href="https://instagram.com/bbcfuture_official/">Instagram </a>

If you liked this story, <a dir="ltr" href="http://pages.emails.bbc.com/subscribe/?ocid=fut.bbc.email.we.email-signup">sign up for the weekly bbc.com features newsletter </a>, called “If You Only Read 6 Things This Week”. A handpicked selection of stories from BBC Future, Earth, Culture, Capital, Travel and Autos, delivered to your inbox every Friday.

Bite-sized knowledge
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How fast food reveals secrets of the economy

The Pizza Principle: Linking Fast Food With The Economy

Chocolates, Popcorn And Economics

Consumption Of French Fries And Global Economy

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Bite-sized knowledgeto upgradeyour career

How fast food reveals secrets of the economy

The Pizza Principle: Linking Fast Food With The Economy

Chocolates, Popcorn And Economics

Consumption Of French Fries And Global Economy

IDEAS ABOUT

MORE LIKE THIS

The Story of How McDonald’s First Got Its Start

What's so super about super foods?

Health halo effect: Why you should never order the salad at a fast food outlet | Brain Fodder

It's time to

READ

LIKE

A PRO!

Bite-sized knowledge
to upgrade
your career