Thursday, May 8, 2008

POP for PPP: Tracking Beer Prices Around the World tracks beer prices around the world by letting people enter in the local price of pint. With entries on just about every country, and conversion to three kinds of dollars (US, Canada and Australia), Pounds, and Euros. So some of the data looks a little suspect (like where are the $2.50 beer is Washington DC)*, but overall a few lessons can be learned.

First, beer is cheapest in African countries. Can anyone confirm the sub $.50 pints for beer in Ethopia?

Second, beer is more expensive in out of the way place or expensive European countries. Also I think you should not drink beer in France on average $8 a pint, drink wine instead.

This project reminds me of the Big Mac index. This index created by the economist compares Big Mac prices in different countries to find the relative difference in prices and predict when exchange rates are out of whack. By comparing the prices of the same good in two places you can get an idea of purchasing power parity (PPP), which is the difference in prices between two countries. The reason the index works is that everywhere the Big Mac is two all beef patties, lettuce, cheese, special sauce, on a seaseme seed bun.** Could the price of a pint (POP) work for PPP, probably not since I don’t think Costa Rican ($1.32) beer is the same quality as a Czech ($1.89) beer (trust me I have done the research). That's apple and oranges or Bud and Budvar.

* actually cheap beer can be found at the Toledo Lounge in Adams Morgan
** except India, where it is made with chicken

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seaswell said...

i am so glad to be moving from NY, NY (average of $7 a pint) to the northwest (average of about $2.50). at an average saving of $$.50 a beer, it's looking like i'm going to be a millionaire by the time i retire.

i'd be interested to know whether beer prices are good predictors of the general economy/cost of living in any given area.

Dan said...

I don't recall seeing draft beer anywhere in Ethiopia. But I recall paying about 5 birr for a bottle of Kastel or St. George Beer in Addis Ababa -- that was about $.75 at the time or about $.55 now. Of course, those are faranji (foreigner) prices so they may be lower for locals, and they almost certainly are lower outside Addis.

I also remember really wanting a bourbon but not finding anywhere outside the Addis Sheraton, which is an amazing palace of opulence owned by -- guess who? -- the Saudi royal family. I paid US$15 for a double Jack Daniels there.