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.
Read More at Reason . By Ronald Bailey.