Economics

Freedom Is Good for You

Science proves overwhelmingly that economic freedom helps women, children, and other living things.

|

Economic freedom is, as Martha Stewart might say, a good thing. That's not just my bias as a libertarian: I've got science on my side.

In a new study published in Contemporary Economic Policy, two of the authors of the annual Economic Freedom of the World Index set out to see how other researchers were using their work. Specifically, West Virginia University economist Joshua Hall and Southern Methodist University economist Robert Lawson found 402 scholarly articles that use some aspect of the index, which the Fraser Institute has published each year since 1996. The institute broadly defines economic freedom as "the extent to which you can pursue economic activity without interference from government, as long as your actions don't violate the identical rights of others." As Hall and Lawson further note, the Economic Freedom Index is "within the classical liberal tradition that emphasizes the importance of private property, rule of law, free trade, sound money, and a limited role for government."

Once Hall and Lawson identified the articles citing the Index, they whittled the list down to 198 papers that use it as a substantive variable in their analyses, usually trying to correlate economic freedom with some other outcome, such as economic growth, income levels, productivity, poverty, inequality, and so forth. Based on the effects identified in each study, Hall and Lawson sorted the articles into three outcome groups: good, bad, and mixed. 

An example of a good outcome would be a 2008 study in the Journal of Economic Behavior and Organization finding that "those societies that rely upon individual economic freedoms to promote women's well-being have been more successful than those societies relying upon greater political rights." Or the 2007 analysis by Austrian researchers for the Institute for Advanced Studies in Vienna concluding "more economic freedom is associated with lower gender wage gaps."

With regard to the effects of greater economic freedom on the welfare of children, a 2006 study published in the Journal of International Trade & Development correlated child labor rates with the index's ratings of countries' openness to trade. From 1960 to 2000, the article reported, "Child labor force participation rates declined on average by 3 percentage points per decade while trade openness increased on average by 6 to 7 percentage points." A third study, published in Contemporary Economic Policy in 2008, found that economic freedom correlated with greater protection against the extinction of species. Insecure property rights, for example, are associated with the type of deforestation that threatens the habitat of many endangered species.

Economic freedom isn't all beer and pizzas. In 2007, two economists from Lund University reported in the Journal of Economic Literature that higher levels of the stuff are associated with greater income inequality. In particular, they find that "increased economic freedom has been associated with increasing inequality, and that this effect most likely comes from deregulations and increased trade openness." 

Another study that located a bad outcome was published in the Annual Review of Public Health in 2008. It reported that economic freedom contributed to rising obesity by lowering food prices, empowering women to participate in the paid workforce, and producing fewer restrictions on the entry of new businesses selling food into the marketplace. Likewise, a 2003 study in the Journal of Economic Perspectives found that people living in developed "countries with more price controls are much less obese than people in countries without price controls." In other words, freedom tends to make people fat. A sociopolitical recipe for reducing obesity might involve establishing price controls, forcing women to stay home, and imposing regulations that limit the creation of new businesses.

Once Hall and Lawson finished sorting through the relevant 198 articles, they found that two-thirds (134 articles) reported good outcomes correlating with higher levels of economic freedom. Twenty-eight percent (56 articles) reported mixed outcomes and just four percent (8 articles) found economic freedom correlated with bad outcomes. "The balance of the evidence," Hall and Lawson conclude, "is overwhelming that economic freedom corresponds with a wide variety of positive outcomes with almost no negative tradeoffs."

In that case, here's another piece of good news: According to the latest Economic Freedom Index, "average economic freedom rose from 5.30 (out of 10) in 1980 to 6.88 in 2007. It then fell for two consecutive years, resulting in a score of 6.79 in 2009 but has risen slightly to 6.83 in 2010, the most recent year available." 

Less happily, the United States has fallen from 8.65 in 2000 to 8.21 in 2005 and 7.70 in 2010. After a long stint as third freest economy in the ratings, the U.S. is now number 18. America's falling rank in the Index provokes the cynical thought that perhaps as our freedom contracts, so too will our waistlines.  

NEXT: For First Time Ever, Cyclist Found Guilty of Felony Vehicular Manslaughter

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Economic freedom may be good for you, but won’t somebody please think of the legislators and regulators?

    1. You know who thought of the Reichstag legislators and train regulators?

      1. Madison. true that Rebecca`s c0mment is great… on friday I bought a great Dodge when I got my check for $5286 this month and-over, ten grand last month. this is certainly the nicest-work Ive ever done. I actually started seven months/ago and practically straight away got me at least $87 per hour. I follow this great link…. WEP6.COM
        Go to website and click home for more details.

  2. …increased economic freedom has been associated with increasing inequality, and that this effect most likely comes from deregulations and increased trade openness.

    Yeah, and if you let a bunch of kids out of a classroom, you’ll find that some can run faster than others.

    Why we feel the need to automatically say inequality == badness is beyond me.

    1. Exactly. In a country where people are free to drop out of highschool, immigrate from a third world hell hole lacking the ability to read, or develop the first quantum computer, why WOULDN’T there be income inequality? What people think its unfair that a Doctor doesn’t earn the same as a high school dropout?

      1. What people think its unfair that a Doctor doesn’t earn the same as a high school dropout?

        Progressives. Unless they are, themselves, a doctor. In which case, they wouldn’t think it’s fair.

        1. Subsidize me, tax everyone else, please.

    2. Economic inequality is a false argument in the first place. lets look at a nation with no jobs, everyone is equal. Now add some economic freedom. Some people start to work and make money, at first most are still equal but soon some have more. Now much latter there will always be people starting out with nothing and some who will find a comfort level and quit trying to grow their profits while others will desire even more. So actually greater ineguality actually means greater possibilities for greater wealth there is no moral malfeasance in the inequality. In fact with greater wealth there are more opportunities for philanthropy. I don’t see to many third world billionairs creating charities to help the poor in other countries let alone their own.

    3. Yeah, and if you let a bunch of kids out of a classroom, you’ll find that some can run faster than others.

      Not if the The Handicapper General has anything to say about it.

    4. What’s not mentioned is how the inequality occurs. I suspect with economic freedom, the rich get richer quickly while the poor get richer at a slower pace. On the other hand, with less economic freedom, I suspect the rich get poorer quickly (except for the few that are politically connected) while the poor get poorer at a slower pace. Seems an easy choice, but many would be willing to shoot themselves (and everybody else) in the foot in the name of equality.

      “[Socialism’s] inherent virtue is the equal sharing of misery.” ~Winston Churchill

  3. Where is the social justice in this freedom stuff?

    It’s not there, that’s where!

    It’s better for everyone to be dirt poor, because that’s fair. Except for the political class of course. They need to live in total luxury because otherwise, they might lose the great wisdom to rule over us and provide all of our new found poverty but fairness.

    1. They need to live in total luxury because otherwise, they might lose the great wisdom to rule over us and provide all of our new found poverty but fairness.

      +1 Dacha, comrade

    2. They need to live in total luxury because otherwise, they might lose the great wisdom to rule over us and provide all of our new found poverty but fairness.

      While they’re busy taking pictures of their junk and sending it to college coeds.

      1. Hey, he only continued doing it until he and his wife worked out their issues. Then he stopped. Stop being such an obstructionist!

        1. See, if we had a more powerful government, our central planners would be too busy to take pictures of their cocks and send them to coeds. Instead, they have too much free time. Therefore, the problem is limited government.

          For the sake of our politicians’ reputations, we must increase the size and scope of federal power. Do it for the coeds!

  4. women, children, and other living things.

    I am Other.

    /msnbc

  5. Well, we wacko birds already know these things to be true.

    As far as convincing the proglodyte tribe of it, science isn’t going to work, you have to rely on emotions. Unless the science agrees with their emotions, then it’s relevant.

    1. Appeals to emotion, all the way down.

      The sad part: it fucking works.

      How can such assholes do so much damage by basically just saying “SECURITAH!” and “CHILDRUNZ!” is beyond me.

      Note to self: whenever I’m in a tight spot, from now on, I’m just going to respond “But think of the security of OUR CHILDRUNZ!”

      1. Do we get to dismiss libertarians by putting words in all caps and adding Zs to them? As in, “Those libertarians are so dumb and emotional, it’s always about the freedom of TEH JOHN GALTZ!!”

        I realize that the existence of children presents major problems for the libertarian worldview, but they do in fact exist.

        1. Libertarians are harder to fool with empty slogans than are intellectual dynamic duo of you and Melissa HP.
          When someone like her agrees with you on everything, don’t you feel doubt?

          1. Libertarianism is nothing but empty slogans.

            1. In all seriousness, and out of curiosity, what do you get out of commenting here?

              1. Tony is one of our resident trolls who only come here for the verbal abuse – like the opposite of that skit in Monty Python.

                I often wish there was some sort of Troll Central we could contact to get some new ones as the group we have is somewhat mentally defective.

              2. In all seriousness, what do libertarians get out of their engagement in politics? Ballot access in a few states, a couple of referenda, a smattering of positions in local governments. Isn’t that the extent of the libertarian achievement?

                1. You would be surprised, I live in a city where the city council has about 1/4 with Liberty principles. Next election we expect half. The national politics is a fine place to debate, but the work and success is achievable at the local level. Case and point, one of the seats had a total of 1,500 votes and was won by 12 votes. Liberty can be won.

              3. The small comfort that I’m doing my duty to combat the forces of evil in my own little way.

                1. You’re right about that, Tony.

                2. It seems like there’d be far more effective ways for you to do that. Do you like the abuse you get here? I really want to understand the psychology of a troll.

                3. Tony, in that our schools and universities pump out good little liberals at an astonishing rate and our media and culture mostly give voice to people like you, and your victory seems so secure these days, it’s amazing you still seek out the wicked.

        2. “I realize that the existence of children presents major problems”

          It would be much easier to deal with it if they all grew up at some point. Unfortunately that point was never reached for Tony.

          1. And it never shall be reached by Tony a.k.a. TONY a.k.a. Peter ‘I refuse to grow up’ Pan.

        3. You talking to me?

  6. “America’s falling rank in the Index provokes the cynical thought that perhaps as our freedom contracts, so too will our waistlines.”

    Well I’m already skinny, so thanks.

  7. what Jonathan implied I’m surprised that you able to get paid $8990 in a few weeks on the internet. have you read this site… http://www.Can99.com

  8. Wait, isn’t Somalia supposed to be the example that progressives like to point to as libertarian? So what keeps THEM so skinny?

    1. Their price controls? All the regulation of new businesses?

    2. I wonder how many of those progressives realize that Somalia is a failed communist state.

  9. “SCIENCE proves overwhelmingly that economic freedom helps women, children, and other living things.”

    Good to see you rely on science. SCIENCE also tells us that climate change is real, and potentially catastrophic to those same women, children, and other living things. And in a most recent SCIENCE study, that it could cost $60T.

    http://www.reuters.com/article…..PU20130724

    We’re not political in our use of, and dependence on, science, are we?

    1. LOL you call economic modelling “science”!

      Too funny!

  10. before I looked at the draft 4 $9852, I did not believe that…my… brother really bringing in money part-time at there labtop.. there aunts neighbour has been doing this for less than seventeen months and recently took care of the mortgage on there cottage and bourt a gorgeous Land Rover Range Rover. this is where I went, go to this site home tab for more detail— http://WWW.JOBS31.COM

  11. interference from government, as long as your actions

  12. Economic Policy, two of the authors of the annual Economic

Please to post comments

Comments are closed.