NCPA - National Center for Policy Analysis

State Freedom Index

April 14, 1999

Researchers at Clemson University have created an index of economic freedom for each of the 50 states, based on more 100 different variables, including government spending, regulation, welfare, school choice, taxation and the judicial system.

For each variable, they gave the states scores ranging from one to 10, with the lowest score being the least restrictive of economic freedom. The weighted scores were then used to construct a single index that allows the states to be ranked according to their index score.

The Index of State Economic Freedom, based on data from the middle to late 1990s, shows:

  • Idaho, with an index score of 3.92 is relatively the freest state, and New York (7.90) is the least free.
  • The top four states after Idaho, in rank order, are Virginia (4.08), Utah (4.32), Wyoming (4.41) and South Dakota (4.47).
  • The states ranking just above 50th place New York are Rhode Island (7.00), New Jersey (6.84), Massachusetts (6.71), and Connecticut (6.66).

The index reveals several distinct regional patterns to freedom.

  • Southern and western states dominate the top of the ranking while Northeast and Pacific Coast states rank at the bottom.
  • There are pockets of freedom in the mountain west region and in the South; whereas the Northeast is characterized by a relative absence of economic freedom.

Observable economic activity, such as population in-migration, capital investment and growth in per capita disposable income, correlates quite well with the index, say the authors -- that is, where economic freedom is higher, there is more in-movement of population and higher rates of per capita income growth.

Source: John Byars, Robert McCormick and Bruce Yandle, "Economic Freedom in America's 50 States: a 1999 Analysis," March 1, 1999, Center for Policy and Legal Studies, Department of Economics, Clemson University, Clemson, S.C. 29634, (864) 656-3441.


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