At the time of find cheap vacation destinationsIt is not only important to make sure you book the trip safely, but also to take into account the cost of living at the destination. Because it is not the same to travel to Switzerland, where the cost of living is higher, than to, for example, Poland.
In that sense, there is a curious economic fact that can help you: the Big Mac Index
What is the Big Mac Index
The Big Mac Index is an economic index that The Economist has produced for decades, and collect the cost of a Big Mac hamburger in countries around the world. Its objective is to compare the price of the hamburger at the exchange rate in dollars with the official exchange rate, and thus be able to assess whether the currency in question is overvalued or undervalued.
For example, in Switzerland this hamburger costs 6.50 SFr ($ 7.29 exchange rate), which implies a $ / SFr exchange rate of 1.15, since in the United States the same hamburger costs $ 5.66. However, the $ / SFr change is 0.89, which suggests that the Swiss franc is 29% overvalued.
However, this valuation does not take into account the role that the level of wealth of a country plays in the price of the hamburger. Therefore, they also have a series with the price adjusted according to the Gross Domestic Product per capita of each country, which is more appropriate when assessing the price of different currencies.
How to Find Cheap Vacation Destinations Using the Big Mac Index
When choosing a cheap vacation destination, you can use the Big Mac Index as a reference to estimate the cost of living of the country in question. Thus, it is likely that in destinations with a lower price it will be cheaper to eat out, shop or carry out activities.
This is a world map with the prices that this index collects
As can be seen, most of Europe is average, with the Eastern countries being cheaper and Switzerland and the Scandinavian countries more expensive. Outside the European continent, Southeast Asia and some countries in Africa and the Middle East stand out at the bottom, while the United States, Canada and Australia have a similar price.
Other ways to find cheap vacation destinations
Compare GDP per capita by country
Another way to find cheap vacation destinations is compare the GDP per capita of the countries. Generally, countries with lower GDP per capita tend to have a lower cost of living, although this is not always the case.
In fact, if you compare both maps, you can see that there is quite a correlation between the two, although not in all countries. This can be due to many factors, such as the cost of raw materials, labor, or taxes in the country in question.
Compare the Cost of Living Index
The Cost of Living Index takes into account many factors, such as the cost of housing, food, restaurants, transport … But it is equally interesting for find a cheap vacation destination in which your money “spreads” more.
However, it must be taken into account that these indexes and data are often not related to the cost of accommodation, especially if you plan to travel to a resort designed for tourists. You also have to take into consideration the extra expense of having to travel further, of hiring the insurance you may need and of currency exchange if you travel outside the euro zone.
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