Fun with numbers
Hey, you know how all those wimpy leftist economies are trounced by the powerhouse right wing economies?
Yeah, not so much.
Every year since 1995, the Heritage Foundation and the Wall Street Journal put out an Index of Economic Freedom, ranking countries on their fealty to the precepts of free markets and free trade….
A more interesting test than Heritage’s would be to see how countries’ scores in a base year correlated with subsequent growth. Investments are planned and career choices made on the basis of expectations for the future, and expectations are formed mainly by conditions in the present and recent past. And it’s rare that political, economic, and social structures change radically over a few years. So assuming the index means anything at all, it should have some bearing on future performance.
Let’s see how scores in 1996 correlate with economic growth in the following years. And we’ll take a closer look at a version the Heritage/WSJ measure, the change in freedom and its correlation with growth.
And what did he find?
…For the statistically inclined, the correlation is -.02, which means that the association is actually in the opposite direction – more “freedom” means less growth – but the correlation is meaninglessly small.
Running the numbers on the report’s measure, the improvement in the index vs. GDP expressed in 1995 U.S. dollars, produces somewhat better correlations (.33, to be precise). But that’s still very far from impressive;…
UPDATE: I misread the second chart. It looks like this is pretty much meaningless.