Burrito index
The Burrito Index is a concept used informally to measure changes in the cost of living and to understand the real-world impact of inflation on everyday expenses, particularly for ordinary individuals. This index is not an official economic or financial indicator but is often cited in discussions by economists and writers seeking to illustrate economic trends in a relatable way.
Jason "Thor" Hall maintains a custom Burrito Index specifically crafted to track the caloric value of a twitch-viewer over a month. For that matter he includes some of the following variables and more:
- Weight
- Price
- Income per twitch viewer
- Calories per burrito
Overview
The Burrito Index is based on the idea of tracking the cost of a specific everyday item, namely a burrito, as a proxy for the overall cost of living. This approach provides a simplified yet accessible method for assessing how changes in prices for essential goods and services can affect the standard of living for the average person.
Methodology
The methodology for the Burrito Index is straightforward:
- Selection of a representative item: The index begins by selecting a common consumer item, in this case, a burrito. The choice of a burrito is somewhat arbitrary but practical, as it includes various ingredients and can serve as a general representation of everyday consumption. It is also very delicious.
- Tracking: Researchers or analysts regularly monitor the cost, weight, calories etc. of a burrito from a specific source or type of restaurant over a defined period.
- Comparing changes over time: The core analysis involves comparing how the cost of the selected burrito changes over time. If the price of the burrito increases significantly, it may suggest rising inflation or a decline in the purchasing power of consumers. The comparison can include other measures, specifically weight.
- Extrapolation to broader trends: While the Burrito Index itself is mostly limited to the burrito itself, it can be used as a simplified representation of the overall cost of living. An increase in the cost of the burrito that outpaces income growth may indicate that individuals are finding it more challenging to afford basic necessities. It can also be used as a representation of spending power or equivalent income expressed in units of "burrito".
Use and Limitations
The Burrito Index is not intended to replace official economic indicators like the Consumer Price Index (CPI) or the Gross Domestic Product (GDP). Instead, it serves as a relatable tool for individuals and commentators to discuss and understand the impact of inflation and rising living costs on everyday life.
One of the key limitations of the Burrito Index is its lack of comprehensiveness. It focuses on a single consumer item and does not account for the full range of goods and services that make up the cost of living. Therefore, its results may not be as precise or accurate as official economic data.
Origin
The Burrito Index concept has been associated with Charles Hugh Smith, an author and economist who has written about the concept in the context of economic trends and living costs.