Measuring Economic Freedom

Better Without Size of Government

Bibliographic Data

ID2062791
AuthorsJan Ott (0000-0001-7183-5812, Erasmus University Rotterdam, corresponding author)
Year2018
Volume135
Issue2
Pages479-498
Publication date2018-01-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueSocial Indicators Research (JOURNAL)
Journal identifiersISSN: 0303-8300 • E-ISSN: 1573-0921
PublisherSpringer Science and Business Media LLC (PUBLISHER)
DOI10.1007/s11205-016-1508-x
PMID29398770
OpenAlexW2559407904
LanguageEN
Citations received24
References cited18

The Heritage Foundation and the Fraser Institute measure economic freedom in nations using indices with ten and five indicators respectively. Eight of the Heritage indicators and four of the Fraser-indicators are about specific types of institutional quality, like rule of law, the protection of property, and the provision of sound money. More of these is considered to denote more economic freedom. Both indices also involve indicators of 'big government', or levels of government activities. More of that is seen to denote less economic freedom. Yet, levels of government spending, consumption, and transfers and subsidies appear to correlate positively with the other indicators related to institutional quality, while this correlation is close to zero for the level of taxation as a percentage of GDP. Using government spending, consumption transfers and subsidies as positive indicators is no alternative, because these levels stand for very different government activities, liberal or less liberal. This means that levels of government activities can better be left out as negative or positive indicators. Thus shortened variants of the indices create a better convergent validity in the measurement of economic freedom, and create higher correlations between economic freedom and alternative types of freedom, and between economic freedom and happiness. The higher correlations indicate a better predictive validity, since they are predictable in view of the findings of previous research and theoretical considerations about the relations between types of freedom, and between freedom and happiness

Big government · Economic freedom · Economics · Government (linguistics · Government spending · Happiness · Index of Economic Freedom · Market economy · Political science · Politics · Public economics · Quality (philosophy · Subsidy · Welfare · Corruption and Economic Development · Fiscal Policy and Economic Growth · Income, Poverty, and Inequality · Law

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