Ask a Scholar: Economic Freedom and Well-Being

Ashley Thorne

Dear Ask a Scholar,  

Many have blamed the current US economic crisis on capitalism and attempt to point out the 'socialist' countries (Norway, Denmark for example) are doing just fine. I tend to think that the US is suffering from not enough freedom and capitalism. What information or comparisons are there regarding the health of the general economies and standard of living between countries that practice capitalism and socialism?

-Tom Koch

Answered by Ashley Thorne, director of communications of the National Association of Scholars.

I’m not a scholar but I can refer you to the 2010 annual report, “Economic Freedom of the World,” compiled by scholars at the Fraser Institute’s Economic Freedom Network.[1]

According to the report, countries with greater economic freedom have higher standards of living:

Nations that are economically free out-perform non-free nations in indicators of well-being

•     Nations in the top quartile of economic freedom had an average per-capita GDP of $32,744 in 2007, compared to $3,858 for those nations in the bottom quartile in constant 2005 international dollars (exh. 1.6).

•     In the most-free quartile, the average income of the poorest 10% of the population was $8,474 compared to $910 for those in the least-free quartile, in constant 2005 international dollars (exh. 1.9). Interestingly, the average income of the poorest 10% in the most economically free nations is more than double the overall average income in the least free nations.

•     Life expectancy is 79.3 years in the most-free quartile but 59.9 years in the least-free quartile (exh 1.10).

•     People in nations in the most-free quartile report a life satisfaction of 7.5 out of 10 while those in the least-free quartile report a life satisfaction of 4.7 (exh. 1.11).

•     Nations in the most-free quartile have an average score of 7.4 for corruption on a scale of 10, while those in the least-free quartile have an average score of 2.6 (exh. 1.12).

•     Nations in the top quartile have an average score of 1.6 for political rights and civil freedoms on a scale of 1 to 7, where 1 marks the highest level, while those in the bottom quartile have an average score of 4.3 (exh. 1.13).

For more statistics on economic freedom and well-being, please refer to the annual report. Additional papers can be found at www.freetheworld.com. h/t Edward Stringham

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[1] The report’s primary authors are James Gwartney of Florida State University, Joshua Hall at Beloit College, and Robert Lawson at Auburn University.

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