NCPA - National Center for Policy Analysis

States Ranked on Economic Freedom Index

January 27, 2004

A new study released today by the National Center for Policy Analysis (NCPA) and Canada's Fraser Institute, shows a remarkable diversity among the 50 U.S. states and 10 Canadian provinces. "Economic Freedom of North America, 2004," ranks all 50 states based on overall economic freedom.

Among the states, Colorado, Delaware, South Dakota and Tennessee tie as most free; West Virginia sits alone as least free. The rankings are based on factors such as size of the tax burden, size of government and flexibility of the state's labor market.

For example:

  • The tax burden among the states ranges from 8.6 percent of income in New Hampshire to 12.8 percent in Maine.
  • Government spending on goods and services ranges from 8.4 percent of all spending in New Hampshire, to 20 percent in Alaska.
  • Per capita output of goods and services in the top ten states averaged more than $2,420 more than the average state.
  • Per capita output of goods and services in the bottom ten averaged more than $2,420 less income per person than the average state.

The index scores are based on nearly 20 years worth of data and include a multitude of variables. The methodology, say researchers, is that used in Economic Freedom of the World, an annual ranking of countries worldwide published by the Cato Institute.

Source: Amela Karabegovic, Fred McMahon and Dexter Samida, with Glenn Mitchell, "Economic Freedom of North America," Fraser Institute and National Center for Policy Analysis, 2004.


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