2015 Human Freedom Index – Data and Analysis

The Human Freedom Index was released recently by Fraser, Cato, and other think-tanks. It is an important evaluation of personal, civil, and economic freedom (1). It uses 76 indicators to rank 152 countries around the world, one of the most comprehensive.

On a scale of 0 to 10, with 10 as the most freedom, the non-weighted average for 152 countries was 6.96 in 2012. That is down from 7.01 in 2008.

By comparing their results with OECD measures and other economic indicators, we can make observations about the effects of freedom on economic outcomes.

NEW ZEALAND (2) ranked number five finishing with a personal freedom index of 8.97, economic freedom of 8.25, and Human Freedom Index finished 8.61. (1)

  •           GDP per capita: $36,401
  •           GNI per capita: $39,300 (9)
  •           Unemployment: 5.8%
  •           Workforce participation: 74.6%
  •           All OECD confidence indicators are strong and above average.

AUSTRIA (3) finished 12th and received a 9.42 in personal freedom, 7.48 in economic freedom, and Human Freedom Index was 8.45. (1)

  •           GDP per capita: $46,171
  •           GNI per capita: $50,390 (9)
  •           Unemployment: 5.6%
  •           Workforce participation: 71.2%
  •           OECD’s confidence indicators are average.

BRAZIL (4) finished 82nd. They receive an economic freedom score of 6.61 and a personal freedom score of 7.02, and finish with a Human Freedom Index of 6.82. (1)

  •           GDP per capita: $11,208 (5)
  •           GNI per capita: $36,994 (9)
  •           Unemployment: 6.9% (7)
  •           Workforce participation: 69.8% (8)
  •           OECD confidence indicators are below average.

TURKEY (8) finished 62 with 7.16, 7.703, and 7.10 in the personal, economic, and Human Freedom, respectively. (1)

  •           GDP per capita: $19,054
  •           GNI per capita: $10,850 (9)
  •           Unemployment: 9.9%
  •           Workforce participation: 50.1%
  •           OECD confidence indicators are below average.

OBSERVATIONS ON THE UNITED STATES

The United States ranked 8.71 in personal freedom and 7.81 in economic freedom with a Human Freedom Index of 8.26. Hong Kong, with the highest Freedom Index of 9.04, received 9.09 and 8.98 in personal and economic freedom, respectively.

As you can see, the United States did not even make the top ten and only barely made the top 20. Researcher Fred McMahon says, “Over time the United States has seen an erosion of property rights and an expansion of quasi-judicial regulations. The data also points to a significant weakening in the rule of law.” Since 2008, the Human Freedom Index for the United States has declined .08.

CONCLUSIONS

I selected four countries – two with lower levels of Human Freedom and two with higher levels. Using various economic indicators, I find more favorable results associated with higher levels of freedom. The same relationship exists among other countries in lower versus higher tiers.

Under higher levels of freedom, countries experience higher average GDP per capita. The highest quartile of freedom is about five times more than the second. This is important because GDP per capita is associated with higher standards of living.

The findings presented here support empirical research on the outcomes of economic freedom. Countries that are friendlier to trade, institute limited governments, and respect property rights experience reductions in poverty. (10)

Although lower ranked countries have major systemic problems, what is clear is that democratic governance and economic freedom are prevalent in countries with favorable key economic indicators. Employment and incomes are higher. Civil liberties are stronger.

The world has seen an overall decline in Human Freedom, but that should not necessarily be a cause to worry. Many of the lower tier countries are highly volatile and declined overall. Moreover, many countries have improved significantly, especially in economic freedom. These improvements are expected to continue through the 21st century and deliver the results we’ve seen thus far.

SOURCES:

  1. http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/human-freedom-index-preliminary-report.pdf
  2. https://data.oecd.org/new-zealand.htm
  3. https://data.oecd.org/austria.htm#profile-jobs
  4. https://data.oecd.org/brazil.htm
  5. http://data.worldbank.org/indicator/NY.GDP.PCAP.CD
  6. http://www.bloomberg.com/news/articles/2015-07-23/brazil-unemployment-rate-rises-in-june-to-near-five-year-high
  7. http://data.worldbank.org/indicator/SL.TLF.CACT.ZS/countries/1W-BR?display=graph
  8. https://data.oecd.org/turkey.htm#profile-economy
  9. http://data.worldbank.org/indicator/NY.GNP.PCAP.CD
  10. https://ideas.repec.org/p/ewc/wpaper/wp60.html

 

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