Choosing a Place to
Travel based on Cost
Outline
- Overvalued and undervalued currencies
- Ten common countries in the cheapest countries listings
- Least expensive destination in the Eastern Hemisphere
- Least expensive destination in the Western Hemisphere
- Safety Factor
- What do you think of the Leffel
quote
Overvalued and
undervalued currencies
Using the formula in the Big
Mac Index interactive site, how much is the Big Mac overvalued in the most
expensive country, and how much is it undervalued in the least expensive? Which
countries would be the cheapest for travel, and which would be the most
expensive based on this index?
According to the interactive Big Mac index through the economist the Big Mac is overvalued in Switzerland. I have always heard Switzerland was very expensive and I suppose a simple metric like this illustrates the point very well. The fiat currency for the Swiss is the Swiss Franc. A Big Mac costs 6.50 Swiss franc. In the U.S. a Big Mac costs $5.67 USD. With an exchange rate of 1.15 and a difference of 0.97 to the actual exchange rate you are left with the Swiss franc being 18.4 % overvalued.
When it comes to the least expensive country you can see from the chart that South Africa is the country with the least expensive Big Mac. In South Africa they use the South African rand. A Big Mac costs 31.00 rand compared to the U.S. at $5.67 USD. With an exchange rate of 5.47 and a difference of 14.39 to the actual exchange rate you can see that the South African rand is currently 62% undervalued.
|
MOST EXPENSIVE COUNTRIES |
LEAST EXPENSIVE COUNTRIES |
|
Switzerland |
South Africa |
|
Norway |
Romania |
|
Sweden |
Turkey |
|
Canada |
Russia |
|
Israel |
Malaysia |
Ten common
countries in the cheapest countries listings
Read the Leffel chapter and the other links provided to derive a
list of the 10 cheapest countries for travel. Compare this with a more modern
assessment at Indie
Traveller.
After meticulously researching the given material for this week’s assignment I was able to identify at least seven of the cheapest countries to travel currently. There is still a sense that there could be a larger group than just ten, but I took the countries that I came across most in the material. I then used the Indie Traveler assessment to then see whether I found the most appropriate destinations. They are as follows:
India
Brazil
Argentina
Hungary
Thailand
Vietnam
South Africa
Mexico
Indonesia
Romania
I felt pretty good considering that this isn’t set in stone. Currency values change as well as economies. I see that the Indie Traveller is recent. I think it ultimately depends on what variables the author is using to find the cheapest places. The authors in this material are well traveled so they may carry biased opinions as well. Ones preference on language barriers, ease of travel, lodging, risk and transportation amongst other things need to be taken into consideration. Either way you can’t really miss out on the experiences regardless of the destination.
Least expensive
destination in the Eastern Hemisphere
From the above, the Big Mac Index and the most inexpensive airfares you found, find the least expensive destination in the eastern hemisphere for a three-week trip. What criteria did you use to select the country? Insert airfare graphic that shows how you would get to the country. Insert a graphic of an inexpensive lodging. What would be the total cost of the 3-week trip? (The idea here is that cheap lodging over three weeks will counter a more expensive airfare. So, look for the cheapest lodging and find a moderate airfare to that location.) Estimate daily food costs.
I used websites like Kayak to add up to three destinations of choice from my list in the Eastern Hemisphere. I then randomized dates that were like the cheaper season that we’ve been researching. I decided on Bangkok due to its affordability and available housing as well as cheap cost to eat ($4 per meal). With international flights I was having trouble not finding a way around a half day layover. I decided to still go with the layover in Seoul because I’ve been there for a layover for half a day and found enough things to keep busy.
Airfare ($901.05) + Lodging 20 night stay ($404) +Food ($12 day/$252) =$1,570.05
Least expensive
destination in the Western Hemisphere
From the above, the Big Mac Index and the most inexpensive airfares you
found, find the least expensive destination in the western hemisphere for a
three-week trip. What criteria did you use to select the country? Insert
airfare graphic that shows how you would get to the country. Insert a graphic
of an inexpensive lodging. What would be the total cost of the 3-week trip?
(The idea here is that cheap lodging over three weeks will counter a more
expensive airfare. So, look for the cheapest lodging and find a moderate
airfare to that location.) Estimate daily food costs.
It appears Mexico took the cake on the Western hemisphere. I searched the countries in this region to see which had the cheapest and ended up with Mexico. Perhaps the frequency of American fliers and vice versa, a trip to Mexico City was nearly half of a ticket to Argentina or even Columbia. I had a much easier time finding cheap housing and was surprised to find it as easy as I did. However, it was not all as easy as food costs were a little more expensive and have decided with the help of some online research to see that each meal is likely $5-10 USD. So, this will end up costing me more than lodging but had also read that you may be able to eat cheaper here and there for as much as a few dollars.
Airfare ($493.17) + Lodging 21night stay ($267) +Food ($20 day/$420) =$1180.17
Safety Factor
Consider the safety factor in the destination you have chosen. Take a
look the Global
Peace Index rankings (A ranking of countries based on the Peace Index
begins on p. 8.) Which country would be the safest? Where is
the United States ranked? Where do your chosen countries rank?
According to the very informative GPI rankings the safest country currently is Iceland. The US took me a little bit to find but it’s near the bottom at 121. I find this alarming and an eye opener for sure. I know we have issues with gun control, but I’ll take my chances and feel rather safe for the most part where I live. The countries I ended up with on my top ten rank as follows.
India -136
Brazil-106
Argentina-66
Hungary-17
Thailand-113
Vietnam-60
South Africa-125
Mexico-140
Indonesia-55
Romania-24
From this data I suspect that the cheapest of the options on my list are low on the list as they probably don’t offer all the amenities a country that is safer has. This was a good exercise to take into consideration where my dollar may go the furthest in planning my next trip.
What do you think
of the Leffel quote:
"You'll learn far more than you ever did at a university.
Remember the old days when people got a liberal arts education? They went to
Oxford or Princeton to learn about history, politics, social studies,
geography, religion, foreign languages, and economics. Well you'll learn far
more about all those things by traveling than you ever can in college. Ask
anyone in their 30's how much they remember about these subjects from their university
classes. "Not much" will usually sum it up."
This quote has some truth to it but I wouldn’t say that education offers nothing in this case. I think of education as a way to provide you with the tools necessary to be successful in life. As in, an education allows you to get a good paying job (not several) for the most part, in order to provide for yourself and family. While I agree that you will learn a great deal by traveling, if you don’t have basic understanding or education on the world around you then what are you going to learn by traveling without an education? I think they are both complimentary to one another. In my own experiences, I feel because of my education I was able to understand the cultures better and communicate with other groups of people. In other words I feel without an education you’re much less sensitive to another culture and therefore your experience may not be as rich as it would with that understanding in the first place.
Submitted by Nate Wallace on 2/27/2019.