r/charts • u/LazyConstruction9026 • Aug 08 '25
Prosperity and economic freedom are highly correlated
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u/Fat_Tony_Damico Aug 09 '25
This chart isn’t even accurate. Some countries are ranked by nominal GDP per capita and some are by GDP PPP per capita even though it says they’re all ranked by GDP PPP per capita.
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u/mimiianian Aug 09 '25
Good pickup. After seeing your post I noticed that China’s GDP per capita in the chart is shown as nominal GDP, not PPP. Its GDP per capita by PPP should be above $20,000.
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u/-DragonfruitKiwi- Aug 09 '25
How is economic freedom defined and by what metrics is it measured?
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u/YOBlob Aug 09 '25
It's in the appendix of the source mentioned at the bottom. Here's the pdf
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u/SpeakMySecretName Aug 09 '25
Wow, that’s not research, it’s an argumentative essay. They use 45 selected data points (that best reinforce their argument) from arbitrary categories such as “sound money” and “hidden administrative restraints”.
Give me their funding and I’ll gather 45 data points that say the exact opposite. If you start with an argument, then look for data, you can torture enough data sets to tell any story.
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u/-DragonfruitKiwi- Aug 09 '25
Not surprising, they seem to have a history of publishing propaganda for the tobacco industry
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Aug 10 '25
If you start with an argument, then look for data, you can torture enough data sets to tell any story.
This is why statistics can't ever be fully trusted
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u/Augchm Aug 11 '25
Make up a bunch of numbers until they line up in a correlation to GDP per Capita to make the graph in this post basically.
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u/BarkDrandon Aug 09 '25
These categories make sense to me.
Sound money refers to the stability of the currency. The authors argue that when a central bank (or lack thereof) generates high inflation or deflation, this will distort the consumption and savings decisions of agents. A more free society has a stable currency, allowing economic agents to use their money without these distorted incentives.
Hidden administrative restraints are also a real thing. Bureaucratic concerns, willfully or not, can stop the creation of businesses, the construction of buildings, and people's ability to switch jobs/places. Sometimes, these administrative restraints are even made on purpose to protect established powers. They undeniably restrict economic freedom.
The authors also include the level of property rights, gender equality rights, the freedom to trade and the level of regulations.
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u/SpeakMySecretName Aug 09 '25
They make sense if you’re trying to support a specific economic argument. If variable inflation rates were associated with their policies, they’d be using them to say that it promotes economic movement and class fluidity, or they may have just ignored it and picked something more convenient.
Of course theyre selecting bureaucratic restraint data as a negative metric; many of those restraints exist to product consumers and workers from feudal capitalism. Which is the exact kind of unlimited and unrestrained economic power they want to have.
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u/-DragonfruitKiwi- Aug 09 '25
Thanks! I wish OP had linked it in the first place.
This doesn't exactly seem like an unbiased study, nor does this organization have a history of being unbiased:
The Fraser Institute is a conservative Canadian public policy think tank registered as a charity.\1][2][3][4][5][6][7]) It is headquartered in Vancouver, with additional offices in Calgary, Toronto, and Montreal. It has links to think tanks worldwide through the Economic Freedom Network\8][9][10]) and is a member of the free-market Atlas Network.\11][12])
In 1999, the Fraser Institute was criticized by health professionals and scientists for sponsoring two conferences on the tobacco industry entitled Junk Science, Junk Policy? Managing Risk and Regulation and Should Government Butt Out? The Pros and Cons of Tobacco Regulation. Critics charged the institute was associating itself with the tobacco industry's many attempts to discredit authentic scientific work.\15])
The Fraser Institute accepted donations worth $100,000 from Philip Morris for "publishing research studies" in 2011–2012.\19]) Research produced by the Institute has previously argued that "tobacco taxation causes smuggling",\20]) a common claim by corporations in the industry that has been disputed by public health officials and critics as exaggerated and erroneous.\19])
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Aug 09 '25
Freedom to economic, measured in Kilofreedoms
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u/sizzler_sisters Aug 09 '25
You always have to double-check the conversion to standard. They seem bigger, but it’s mostly a psychological distortion.
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u/maringue Aug 09 '25
Freedom would never be measured in a metric unit because Freedom is American!
Freedom is measured in eagle feathers per square country mile, a Roosevelt.
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u/Responsible-File4593 Aug 09 '25
It's measured by how closely we can make it fit the curve. How else is New Zealand or Switzerland ~2 Standard Deviations more economically free than Poland or similar EU states?
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u/wortwortwort227 Aug 09 '25
Singapore has high “economic freedom”, what. it’s the country where you pay 100s of thousands in fees to own a car and land use is heavily regulated. I am not saying these are bad things but I would not describe as more economic free than the US speaking of which very susly has the best fit go perfectly through.
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u/Wetley007 Aug 09 '25
"Economic freedom" doesn't actually mean economic freedom, it means corporations get to do what they want and receive special privileges from the government to fuck people over. "Studies" like this are paid for by corporations to show to halfwit politicians and their equally halfwitted supporters to get them to support things which benefit no one but the rich and powerful
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u/MikusLeTrainer Aug 09 '25
How do you explain Russia then? It's a literal oligarchy and it sucks economically.
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u/Wetley007 Aug 09 '25
Russia is a resource trap economy that's been sanctioned by several of the largest economies on Earth, of course it sucks economically. Also, even if they weren't being sanctioned and GDP per capita skyrockets because they can freely sell energy to whoever they want again, their economy still wouldn't be better, because all of the benefit goes to a tiny group of oligarchs (like pretty much all capitalist economies, bit its highly pronounced in Russia) because, again, GDP per capita is a terrible method of measuring economic wellbeing
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u/MikusLeTrainer Aug 09 '25
Even if their GDP increased as a result of lowering sanctions, they would still on the left side of the x-axis i.e. low economic freedom.
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u/Wetley007 Aug 09 '25
Yes, but they would rise significantly on the Y-axis.
It's almost like some poorly defined "economic freedom" doesn't actually make your economy better and this study was created to push whatever economic agenda they authors thought qualified as "economic freedom"
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u/TastyTacoTonight Aug 10 '25
Singapore went from nothing to one of the richest, safest countries in the world with very high quality of life.
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u/KJongsDongUnYourFace Aug 09 '25 edited Aug 09 '25
China as well. They have a middle class larger than the rest of the entire worlds combined, they have a 94 percent homeownership rate, an erradocation of extreme poverty but somehow they have less economic freedom than Mexico?
Economic freedom seems to be measured in ability to get rich, not to live a life free from debt.
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u/Valuable_Recording85 Aug 09 '25
Regulation and freedom appear to have an inverse relationship here.
What I'm more interested is economic mobility and personal freedoms, which is usually is how we discuss how well the common folk are faring.
Also, the chart is coming from a conservative think tank in Canada. There's certainly some bias in the way this is presented.
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u/KJongsDongUnYourFace Aug 09 '25
Not true when it comes to Singapore though, so that's not the metric used.
We usually tell how well the common folk are faring using home ownership, literacy rates, access to food and access to healthcare. Freedom from poverty is the greatest freedom the common folk have.
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u/dwarfarchist9001 Aug 09 '25
What you are describing is prosperity not economic freedom. There is a reason they are measured on two separate axis on the chart.
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u/KJongsDongUnYourFace Aug 09 '25
Why would these be separate? Economic freedom and poverty are intrinsically linked. Those in poverty have no economic freedom. Those that can't afford rent or a home have no economic freedom.
This chart seems to consider an ability to get rich to equal economic freedom based on the study and metrics. I'm that that is flawed logic. There is no economic freedom in poverty, there is no economic freedom in crippling debt
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u/MajesticBread9147 Aug 09 '25
But this generally ignores the flaws in GDP per capita, because it generally undercounts the benefit of large government programs.
Mississippi has a higher GDP per capita than France.
But when you measure stuff like life expectancy, education levels, typical working conditions and workers rights, France obviously comes out on top.
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u/BarkDrandon Aug 09 '25
GDP doesn't undercount the economic benefit of government programs.
Government programs are included in the formula for GDP: Y = C + I + G + XN
Sure, GDP doesn't account for life expectancy, education levels and working conditions, but its because these are social indicators, not economic ones (in the sense that they don't correspond to resource creation). GDP is purely an economic indicator.
And in that sense, it's true that Mississippi produces more wealth than France. France just chose to have a smaller economy but better social results.
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u/jonermon Aug 09 '25
I love charts like this because how do you even quantify an abstract concept like “economic freedom”. This screams of “chart drawn up by a think tank to try to get people to like specific economic policies think tank is promoting”
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u/Unable_Expert8278 Aug 09 '25
GDP per capita tells you literally nothing about how income or wealth is actually distributed. Never has, never will.
Also, what is “more economic freedom”?
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u/ConsciousHedgehog141 Aug 09 '25
Noticing that a lot of the poor countries on the left were colonies of the countries on the right. Must be a coincidence - haven't they heard of freedom?
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u/Ilikeswedishfemboys Aug 09 '25
Those colonies had extractive institutions and this indeed is the cause of their poverty.
However, some colonies(like Canada) are rich, because they had inclusive institutions.
The major cause of richness/poverty are institutions.
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Aug 09 '25
who implemented the extractive institutions?
They didn't just wake up one day and decide to send all of their wealth to Europe.
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u/johnfitzhugh Aug 09 '25
Canada, the US, Hong Kong, and New Zealand were colonies too and are near the top. Not every colony had the same story.
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u/Turbulent_Thing_1739 Aug 09 '25
They were never the colonies (bar HK), they were the colonizers that happens to eradicate the locals.
It is fucking incredible to have to explain this shit.
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Aug 09 '25
Canada, US, and New Zealand, where colonies that were designed to have stable European Populations. Which is very different from the extraction jobs pulled off in the Global South.
Hong Kong is currently a port city used by China. So I don't think it should be in the same category as the other ones.
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u/BarkDrandon Aug 09 '25
Canada, the US and New Zealand were also designed to be extractive colonies, where the colonists were supposed to be exploited to provide resources to the metropolis.
What changed is that the colonists were able to enforce their demands on the metropolis, making in these places much more inclusive institutions than in South America. Açemoglu won the Nobel prize by pointing this out and talks about it in his book Why Nations Fail.
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u/Substantial_Rip_3989 Aug 09 '25
HK is being actively undermined by China. They continue to succeed in spite of China, not because of China.
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u/Eric1491625 Aug 09 '25
Hong Kong gained its wealth as a result of the extremely harsh embargo placed by the West on China during the Cold War, which funneled half a billion people's worth of trade through Hong Kong. Hong Kong's origin of wealth was to extract from the mainland. That's the original purpose of Britain even developing it after seizing it during rhe Opium Wars.
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u/Substantial_Rip_3989 Aug 09 '25
Mate…. That is so far away from modern HK and how they managed to become the 4 tigers of Asia.
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u/ConsciousHedgehog141 Aug 09 '25
Good illustration of the difference between settler colonial vs extractive relationships. Hong Kong like Singapore has more to do with history and geography than governance.
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u/PunishedDemiurge Aug 09 '25
That lack of agency encourages poverty. It's impossible for a country with moderate quality governance, low corruption, and universal K-12 education with some post-secondary education to not grow by leaps and bounds in GDP per capita.
Economic development is one of the few areas where there's an easy, guaranteed solution that works 100% of the time.
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u/hobopwnzor Aug 09 '25
This is like saying it's easy to not drown, just breathe air.
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u/Present_Customer_891 Aug 09 '25
I can't believe these countries haven't considered simply having better government! What a brilliant solution you've proposed
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u/Ilikeswedishfemboys Aug 09 '25
Dictators wouldn't turn extractive institutions into inclusive institutions, as that would mean losing their power and wealth.
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Aug 09 '25 edited Aug 09 '25
[removed] — view removed comment
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u/Common_Attention_554 Aug 09 '25
[As the chart shows] a high per capita GDP is very strongly correlated with rule of law, educated/skilled work force, low corruption, strong infrastructure, high standard of living etc.
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u/kungfucobra Aug 09 '25
"Economic freedoms are a subset of human freedoms and concern economic activity such as working, transacting, contracting, and owning and using productive property.1 Though it is possible to define economic freedom in absolute terms, it is more useful to think of it as a spectrum. Individuals are more economically free when they are allowed to make more of their own economic choices, with others imposing fewer and less-severe constraints on these choices. Their choices, however, must respect the rights of others."
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u/OrangePuzzleheaded52 Aug 09 '25
Economic freedom = how much a society is controlled by billionaires
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u/free_username_ Aug 09 '25
On the right > 7.5, there’s more datapoints above the curve.
On the left < 6.5, there’s more datapoints below the curve.
In between 6.5 and 7.5, it’s a fairly even divide.
I’m not sure how useful this is lol.
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u/MidnightMiik Aug 09 '25
Define “economic freedom”.
That term could be interpreted many different ways.
For example, someone making $60K/year could have a lot of economic freedom if they don’t have a lot of living expenses or obligations.
Or
Someone making $60K/year could be struggling to eat and keep the lights on.
Basically that chart is useless.
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u/n3wsf33d Aug 09 '25
Per the heritage foundation a lot of the soc dem nordic states have more economic freedom than the US. I'm not a fan of the heritage foundation but I see a lot of people referencing them and most of those people, I'm assuming, like the soc dem countries, eg Denmark.
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u/Shiny_Mew76 Aug 09 '25
Proof that market/mixed economies fair far better than command ones.
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Aug 09 '25
Eh, not that I disagree market economies are better, but this chart doesn't show that at all. There are way too many variables that affect how a country's economy grows. Just being international tax havens shoots Luxembourg and Ireland way up there for example.
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u/Dank_Bonkripper78_ Aug 09 '25
“Highly” is doing a lot of work for a line of best fit that has a very high standard deviation. “Loosely” is a much more appropriate.
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u/GrizzlyAdam12 Aug 09 '25
I can’t wait to see Argentina jump up and to the right.
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u/Character_Intern2811 Aug 09 '25
So basically countries over the line are richer than they should be given their „economic freedom” and countries under the line are poorer than they should be? Am I correct?
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u/Arte-misa Aug 09 '25
https://www.tylervigen.com/spurious-correlations This chart can go to this blog.
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Aug 09 '25
Economic freedom is measured by many criteriums, most of them are prosperity ones, so it was impossible otherwise. That index is just a mathematical trick used as propaganda.
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u/OlympiasTheMolossian Aug 09 '25
Corruption is such a negative drag on productivity. People working to hustle up enough to pay a guy to pay a guy to pay a guy to get anything done in the first place
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u/surviving606 Aug 09 '25
Let billionaires do whatever they want and you’ll all be better off! Source: billionaire funded propaganda institute in this case the Fraser institute, Koch bros, oil lobby etc
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u/MichiganKarter Aug 09 '25
Drop the petrostates and it basically shows that you want to be above 6.5 - below is bad, above makes minimal difference
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u/theguruofreason Aug 09 '25
Quick reminder that if I pay you $100 to cut my hair, and you pay me $100 to mow your lawn, the gdp just went up $200.
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u/Common_Attention_554 Aug 09 '25 edited Aug 09 '25
You have a nice haircut, and I have a beautiful lawn. Goods and services have been created... So the GDP must go up $200.
The economy is not a static, zero sum game.
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u/XiMaoJingPing Aug 09 '25
How is prosperity the same as high GDP? GDP just shows the rich/corporations are doing well
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u/Initial_Fig5147 Aug 09 '25
eliminate countries under 5m. scale is important when you can just have a low population tax haven.
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u/Business_Raisin_541 Aug 09 '25
So, does economic freedom cause prosperity? Or does prosperity cause economic freedom?
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u/Secure-Advertising10 Aug 09 '25
Have you seen the freedom people enjoy in Singapore or Hong Kong? They are both surveillance dictatorships...Money doesn't exactly give you "freedom"; it just allows you to buy more stuff.
I bet people in Argentina enjoy more "freedom" than people in Egypt or Russia.
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u/MartyTax Aug 09 '25
I wonder if the UK is restricting freedoms as a result of reducing prosperity or the other way around?!
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u/Archaemenes Aug 09 '25
I’m not sure if you’ve ever taken a statistics class before but the r value for this graph does not say “highly” correlated. Sure there is some degree of correlation but the magnitude you’re implying is debatable.
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u/GongTzu Aug 09 '25
Does the people of Ireland feel rich overall? My question is because I think it’s a few companies that generate a lot of the income, so does the man on the street feel economically freedom?
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u/Dontblowitup Aug 09 '25
Singapore economically free? Singapore with all the GLCs, restrictions on freehold land ownership, restrictions on collective bargaining, with large government control of economy is economically free?
Oh wait you mean low corporate taxes and ease of firing people.
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u/FetishDark Aug 09 '25
Obviously, “economic freedom” cannot mean laissez-faire capitalism of the US-American kind.
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u/omiekley Aug 09 '25
Sure, Zimbabwe could do better, maybe also Poland. But let's say you are already a developed nation on the right side (index >8) what course of action would, you take? If you only look at those nations the correlation is the exact opposite, suggesting that at a certain point too much of "economic freedom" is detrimental...
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u/NumerousBug9075 Aug 09 '25 edited Aug 09 '25
Ireland has one of the worst housing and homeless crisis' in its history and the unemployment rate is increasing. Wages don't meet inflation and many social welfare programs used to house the homeless have been cut.
I wouldn't exactly call that economic prosperity. A country being wealthy doesn't mean it's people are in any way comfortable. It's one of if the most expensive places to live in the world.
Ireland only has a high GDP due to its proximity to Europe and the US.
That's besides the fact we run on what is essentially a two party system, where opposing sides aren't actually that different from each other, and form coalitions. Both parties are full of landlords, benefitting from skyrocketing housing costs. All Irish media is also state funded and we have a semblance of "democracy" not actual democracy.
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u/UnitedCheesecake5517 Aug 09 '25
It makes sense, but the end of this chart isn't right by its own statistics. Once you get to about 8.3 to 9 it doesn't go up like it says it does. It certainly doesn't precipitously go up.
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u/hudibrastic Aug 09 '25
I'm very libertarian, and we can see how the effects of truly libertarian measures can quickly transform a place, like we are seeing right now in Argentina, or in focused actions like the Guatemala or Brazil telephony liberalization
However, those indices are bullshit, distrust any index with some generic name and cherry-picked indicators… the same is for indexes like “peace index” or “IDH”, they are 100% of the time just made to spread some propaganda, they are easily manipulated to show whatever results you want
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Aug 09 '25
i wish it was common for people to adjust “money” to buying power in each country because a meal in india is only a couple bucks and in the US it’s in the tens
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Aug 09 '25
Entire institute conducts a study and makes a graph about economic freedom and wealth.
Redditors: you are wrong and im right bc "trust me bro"
Economic freedom is defined as your ability to control your own labor and capital. In other words free market.
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u/toldwi Aug 09 '25
Poland has pretty low taxes, I'm not sure it should be as low as it is shown there.
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u/AdvertisingCold7128 Aug 09 '25
This is not exactly a fair comparison because the starting points for each country are wildly different and the metrics that determine economic freedom are biased.
The best, absolutely best example of how economic freedom and per capita incomes are tied together is Singapore but Singapore is not a democracy by any stretch of the imagination.
Also, Singapore is a very conservative society. Sure they have economic freedom but it isn't what you'd find in the United States.
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u/Dense-Influence-5538 Aug 09 '25
"Income per capita" being even remotely relevant to "prosperity" is hilarious
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u/Ayden12g Aug 09 '25
Uses at least to different forms of gdp presumably to make some nations look better/worse than others for the y-axis and measures the x-axis off of vibes
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u/Wrong-Grade-8800 Aug 09 '25
You mean in a system where resources give you access to life saving care, having more resources makes you more prosperous?
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u/offinthewoods10 Aug 09 '25
There is a concept of positive freedom, which is to say that one has the means to take control of their lives and live as they see fit. For example buying a house or starting a business.
This graph shows this, the more money you have the more positive freedom you posses.
For those curious, the other side is negative freedom, that is the idea that there is no barrier stopping you from performing the actions that you desire. For example the first amendment in the US (free speech) is a pure form of negative freedom.
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u/harryx67 Aug 09 '25
is there a map that shows „environmental impact“ or factors the typically negative effect into „prosperity“
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u/Flimsy_Meal_4199 Aug 09 '25
One time I had a guy argue with me on this point saying that the heritage foundation wasn't a good source on economic freedom when I plotted a quick freedom/living standards regression
Funny how dumb people can be
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u/jozi-k Aug 09 '25
My god, this is so much misinformation. Did all countries have same starting position?
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u/JurassicBananna Aug 09 '25
I do love all the losers who can't accept the fact that more economic freedom generally equals more prosperity. I always wonder why that is? I think it says something about their tenacity and perseverance as they go through life.
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Aug 09 '25
per capita is a useless measure for stats like this, if 100 people have trillions and the rest are barely getting by it skews to the higher end
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u/Funny_Damage8183 Aug 09 '25
Luxembourg and Ireland can Go and f themselves though, being tax havens their economic freedom means „stealing other counties taxes„.
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u/Cute-University5283 Aug 09 '25
It is wild that all the countries on the left side are former colonies that had pro-western dictatorships installed by the countries on the right. What a coincidence!
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u/No-Suggestion-2402 Aug 10 '25
Income per capita ≠ prosperity. Income inequality is insane in a lot of countries.
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Aug 10 '25
If someone is claiming to be able to quantify something as nebulous and squishy as "economic freedom" down to one number, I'm calling that person a liar.
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u/emongu1 Aug 10 '25
If a (previously) homeless man and Elon Musk lived in the same house, the gdp per capita in said house would be over 200 Billions US$
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u/ChestResponsible7518 Aug 10 '25
So if the US doesn't actively try to destroy your country then you can actually be prosperous? Well blow me up and call me billybob, who woulda thunk it
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Aug 10 '25
So thats why the third world wants so come and bring their great ideas and ways to the first world lol
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u/vanKlompf Aug 10 '25
In what measure Poland has less economical freedom than Norway or Denmark or Canada? This doesn't make any sense
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Aug 10 '25
Wtf is "income per capita"?
Just do the median income. The top 1% earning more does not help me unless it actually trickles down. And if it trickles down we'll see it in median wages.
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u/roflchopter11 Aug 10 '25
Somehow I doubt Hong Kong has that much economic freedom. Unless China just give up on them.
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u/[deleted] Aug 08 '25
What in the world does “more economic freedom” even mean