Red States Benefit from Economic Freedom, Says Study
June 29, 2005
NCPA/Fraser Study Also Shows Citizens Profit In More Economically Free States
DALLAS, Texas (June 29, 2005) – States that voted for George W. Bush in the last election tend to have less government regulation and more economic freedom than states that voted for Sen. John Kerry, according to a report released today by the National Center for Policy Analysis (NCPA) and Canada’s Fraser Institute. Ten of the 12 states with the most economic freedom were carried by President Bush (Red states), and 7 of the 12 least economically free states were carried by Sen. Kerry (Blue states).
“People in Red states prefer more economic freedom,” said NCPA Senior Fellow Devon Herrick. “The pay-off is that they enjoy higher economic growth.”
The report ranks states based on the degree of economic freedom. The three principal factors are: size of the state’s tax burden, size of state government in relation to the state’s economy, and flexibility of the state’s labor market.
Delaware remained at the top of the index for the third straight year and West Virginia ranked last, also for the third straight year. The index ranks states on a scale of 1 to 10 (highest) and each one-point increase tends to produce about $4,500 more in per capita income (gross domestic product). While economic freedom is not the sole determinant of a state’s wealth, the correlation is strong.
- Compared to the average (median) state, Delaware enjoys $6,772 more income (GDP) because of its higher level of economic freedom.
- By contrast, West Virginia has $8,126 less income because of its lower level of economic freedom.
- The 10 highest ranking red states enjoyed $3,837 in extra per capita income, while the 10 lowest ranking blue states lose $3,205 per person relative to the average state.
This year’s rankings represent a marked improvement for North Dakota, which jumped to 27 th from 34 th, and Maryland, which improved to 16 th from 21 st. But Oklahoma fell 7 places to 36 th and Illinois fell from 15 th to 21 st.
While economic freedom in Canada stayed the same on average in the 2005 report, rankings for most of the provinces improved relative to the U.S. In the 2004 report, only 4 of the 10 Canadian provinces ranked higher than West Virginia; in the 2005 report, only 4 ranked lower.
Editor’s note: Please see attached chart.
|Rank||State||Economic Freedom Score**||Gain (Loss) in Per Capita GDP*||2004 Election||Per Capita GDP||Rank in 2004|
|* Gain (Loss) in Per Capita GDP reflects the estimated amount of economic activity per person that a state gains (or loses)|
compared to the average state based on its level of economic freedom.
|** A higher score means a higher degree of economic freedom|