In 1986, the Big Mac Index was published in The Economist as an informal way of measuring whether the market exchange rates for different countries’ currencies are overvalued or undervalued. The Xiaolongbao Index has emerged in American media to gauge this phenomenon for the globally popular Taiwanese chain restaurant Din Tai Fung.
When the largest Din Tai Fung branch in the world opened in New York City, popular Taiwanese YouTube creator Joeman headed straight there to unbox the experience for the internet to see. He said the xiaolongbao taste almost exactly like they do back home; however, the price is roughly three times higher.
An order of ten of Din Tai Fung’s signature xiaolongbao dumplings in New York will cost you USD$18.50, or about NTD$590. In Taiwan, ten xiaolongbao only cost about NTD$250.
Din Tai Fung has achieved global popularity, with foodies everywhere visiting not just for a satisfying meal, but also to see how the Xiaolongbao Index stacks up. The Xiaolongbao Index, coined after the Big Mac Index, compares the price of their famous soup dumplings across more than 10 countries.
With USD$10, you can only get about 4.3 xiaolongbao in London. In Las Vegas, that gets you 4.4. In Taipei, you can get 15.7 xiaolongbao, but the cheapest xiaolongbao are found in Kuala Lumpur, where ten dollars can buy 16.6 of them.
Wherever you are in the world, you can consider the Big Mac or Xiaolongbao Index an easy-to-digest way of demonstrating purchasing power parity between two currencies.
Hanna Bilinski for RTI News