Economic Freedom: What Is It? How Is It Measured? And How Does It Affect Our Lives?
— Published on September 19, 2024
- Though it is possible to define freedom in absolute terms, it is more useful to think of it as a spectrum. When individuals are freer, others impose fewer and less severe constraints on their choices, aside from those constraints that protect the free choices of others.
- Economic freedoms are a subset of human freedoms. Economic freedom concerns economic activity such as working, transacting, and holding and using productive property. When individuals are more economically free, there are fewer and less severe constraints on their economic choices, aside from those constraints that protect the rights of others.
- The index published in the Economic Freedom of the World (EFW index) employs 45 indicators to measure economic freedom in each of 165 jurisdictions worldwide. It is available in five-year increments from 1970 through 2000 and annually for the years after 2000. These indicators tell us the degree to which individuals in each of these places are allowed to make their own economic choices, free of constraints imposed by others.
- The EFW index has been used in nearly a thousand studies assessing the effect of economic freedom on the human condition. Most of these studies associate economic freedom with good outcomes, including higher and faster-growing incomes, less poverty, better health, longer life, lower infant mortality, greater life satisfaction, cleaner environments, less violence, greater trust, greater tolerance, more democratic institutions, and more personal freedom. For every one article associating economic freedom with a bad outcome, there are eleven that associate it with a good outcome.
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