What can a hamburger tell us about the economy? More than you’d expect. The Big Mac index was developed in 1986 by The Economist magazine. Its purpose was to demonstrate the change of currency value in each country. The index shows the USD value of a Macdonald’s Big Mac in each country, thus illustrating the real purchasing power of each currency.
We love this index because it gives a real grasp of the value of money, and it inspired us to come up with an index of our own, using statistics available to us from Wix users. To do so, we pulled data from Wix Bookings, a platform for professionals of all sorts who sell their time and wish to do so online – photographers, dog walkers, personal trainers and many other service providers.
Creating our index began from a specific entry point: 3% of Wix Bookings users are hairdressers; 40% of them are located in the US. The Big Mac index is based on the requirement that the product in question must be identical across the test. We followed the same logic and chose to focus our index on men’s haircuts.
A male haircut is a simple service that takes usually no more than 20 minutes. We figured the value you get for the price you pay won’t vary too much (how complicated can a man’s cut get, right?)
We sampled 500 websites that offer men’s haircut service and compared prices. Our findings were quite surprising:
For the price of one haircut in Washington, you can get two in New Jersey.
Though geographically dispersed, Illinois, Colorado and Florida offer the same median price for a haircut – $25.
The most expensive haircut we found is in California, where men can cut their hair for no less than $90!
In California we also found the biggest price range, the lowest price being $8 (and the highest, as mentioned, reached $90).
The cheapest haircut of all was found in Texas, for only $5.
Similar to the Big Mac Index, we also calculated a metric called the earn rate. This rate represents the number of working hours you need in order to pay off the haircut and return your investment (ROI). This measure actually sheds light on the quality of life in each state. The fastest earning state was New Jersey, where one can earn the value of one’s haircut in a half an hour’s work. The slowest is North Carolina, where visiting a hair salon costs 1.2 hours of work.
What does this data show us? First of all, before you take your next haircut you may want to consider a road trip. More importantly: Be a smart consumer. Or just grow your hair a bit longer.
Posted by Rotem Peer
Business analyst