Professors William Ruger and Jason Sorens have just released their Freedom in the Fifty States Index, which ranks the states based on public policies affecting economic, social, and personal freedoms (e.g., bans on trans fats and the audio recording of police, licencing laws, taxes, mandated family leave, etc.). They also included specific policy prescriptions for each of the 50 states based on their data as well as a survey of state policy experts.
Check out the whole project and its great website here. You will find the ranking for each state as well as the methodology. They have videos for every state, and you can choose what freedoms you care about to build your own rankings.
This year’s most free state is North Dakota. The state is followed by South Dakota,Tennessee, New Hampshire and Oklahoma. Among the the explanations for North Dakota’s ranking is its regulatory process:
A big part of North Dakota’s high ranking on regulatory policy is due to the state’s excellent liability system. North Dakota also scores well on land-use freedoms, with better-than-average residential land-use regulations and significant eminent domain reform. North Dakota possesses a strange workers’ compensation funding policy: all private and self-insurance is banned, and employers are required to contribute to a state fund. However, it is a right-to-work state. Occupational licensing is excessive but the fees and education/experience requirements are relatively low. Nurse practitioners and physician assistants have greater scope of practice than they do in many other states. Health insurance coverage mandates are a bit worse than average, but the state only has rate bands. Cable regulation has not been reformed.
However, as Ruger and Sorens note, the state could be even better if it cut spending and adopted other free-market policies.
Not surprisingly, and as it did last year, New York State ranks last. It is followed closely by California and then New Jersey. Writing in USA Today, William Ruger and Jason Sorens summarize some of their findings:
When it comes to overall freedom, New York ranks dead last. In New York City itself, of course, Mayor Michael Bloomberg earned national media by enacting a beverage ban which outlaws the sale of sodas 16 ounces and larger. Though the law ran into a judicial buzzsaw on the eve of its enactment earlier this month, it demonstrates the attitude city and state legislators have toward their constituents.
Even New Yorkers who don’t care about sweet drinks have to deal with the highest state and local tax burden in the country, at 14 percent of income.
And of course New Yorkers aren’t simply expressing their frustrations on Google — they’re voting with their feet.
On net, between 2000 and 2010, New York saw 1.7 million of its residents move to other states. While the Empire State’s overall population didn’t drop — the births of new New Yorkers and the arrival of new immigrants prop up the figures — it shed 8.9 percent of its 2000 population.
While New York ranks 50th on freedom, California falls just behind, at 49th. And while New York’s biggest problem is taxes, California’s is business regulation, where it comes dead last in our index.
The Golden State, with hundreds of miles of picturesque Pacific coastline, nonetheless managed to drive off a net of 1.5 million residents between 2000 and 2010 — over 4 percent of its 2000 population. And Californians’ personal income actually contracted by 0.4 percent per year in the seven years before the Great Recession struck, a record worse than any other state besides Michigan.
Ruger and Sorens show that New York isn’t the only one of the least free states to lose people. They all do. They then go on to make the link between restrictions on economic freedom and “nanny-state” regulations. It is worth pointing, again, to my colleague Matt Mitchell’ s research on economic freedom, which shows that it tends to be a fairly good indicator of prosperity. He reviews the literature and reports that:#more#
The economists Chris Doucouliagos and Mehmet Ali Ulubqasoglu recently reviewed 45 studies examining the freedom-growth relationship. They concluded:
“[R]egardless of the sample of countries, the measure of economic freedom and the level of aggregation, there is a solid finding of a direct positive association between economic freedom and economic growth.”
Studies also find that economic freedom tends to be associated with a whole host of other factors that humans tend to value such as:
Higher income levels: Faria and Montesinos (2009) Dawson (1998), De Haan and Siermann (1998), De Haan and Sturm (2000), Cole (2003), Gwartney et al. (2004) and Weede (2006);
Lower poverty levels: Norton (2003);
Less volatility in the business cycle: Dawson (2010);
Better environmental outcomes: Norton (1998), ch. 2);
Fewer homicides: Stringham and Levendis (2010);
and Greater levels of reported happiness: Ovaska and Takashima (2006)
The bottom line is that the freedom multiplier is not only above one, it is very large. On the other hand, if you like freedom, New York and many other states aren’t for you. Granted there are many other reasons to live in the least free states, but lots of people seem to think that it isn’t worth it anymore. Ruger and Sorens’ piece is here.
Also, it is worth reading this article by Nick Gillespie titled “Live Free and Die of Boredom.”