By Tanja Porčnik

A central purpose of the recently released Human Freedom Index, which is co-published by the Fraser Institute, the Cato Institute in the United States, and the Liberales institut in Germany, is to paint a broad but reasonably accurate picture of the extent of overall freedom in the world.

However, a larger purpose of the Index is to comprehend better human freedom’s relationship to any number of other social and economic phenomena. This research could also help us more objectively observe how various human freedoms—be they economic or civil, for example—interact with one another. In this pursuit, we hope that this Index will become a resource for scholars, policymakers, and interested laypersons alike who would like to examine these relationships through time.

This commentary highlights three such relationships. First, the Index provides an opportunity to evaluate the relationship between personal and economic freedom. The correlation between personal and economic freedom was 0.70 for 2017 (see Figure 1). Some countries ranked consistently high in the human freedom subindexes, including Switzerland and New Zealand, ranked in the top 10 in both personal and economic freedom. By contrast, some countries that ranked high on personal freedom rank significantly lower in economic freedom. For example, Sweden ranked 1st in personal freedom but 35th in economic freedom; Belgium ranked 14th in personal freedom but 40th in economic freedom; Slovenia ranked 23rd in personal freedom but 67th in economic freedom; Greece ranked 40th in personal freedom but 102nd in economic freedom; and Argentina ranked in 41st place in personal freedom but 147th in economic freedom. Similarly, some countries that ranked high on economic freedom found themselves significantly lower in personal freedom. For example, Hong Kong ranked in 1st place in economic freedom while ranking 40th in personal freedom; Singapore ranked in 2nd place in economic freedom while ranking 61st in personal freedom; Georgia ranked in 12th place in economic freedom while ranking 59th in personal freedom; Bahrain ranked 50th in economic freedom while 126th in personal freedom; Jordan ranked in 43rd place in economic freedom while ranking 115th in personal freedom; and Malaysia ranked 52nd in economic freedom but 134th in personal freedom.

Second, the findings in the Index suggest that freedom plays an important role in human well-being. Indeed, there is a strong relationship between the level of freedom and income. The left side of Figure 2 shows that countries in the freest quartile enjoy significantly greater average per capita income ($40,171) than those in the other quartiles. On average, the freest countries in the world have a much higher per capita income than those that are less free. Further, the right side of the figure shows this relationship by region.

Third, we use our Index and the Democracy Index developed by the Economist Intelligence Unit (EIU) to analyse the relationship between political freedom and human freedom. The EIU’s Democracy Index covers five areas, of which we use the following four: electoral process and pluralism, functioning of government, political participation, and political culture. That index also measures civil liberties, but we set those elements aside because that area is included in our freedom index. We find a strong relationship of 0.82 between human freedom and democracy (see Figure 3). Important to note is that Hong Kong is an outlier in this regard. While Hong Kong, first administered by the United Kingdom as a colony and since 1997, ruled by mainland China under its “one country, two systems” model, has never experienced democracy, the territory maintains a high degree of freedom for a long period of time. The pro-democracy protests that erupted in Hong Kong in 2014 and that reemerged with greater force in 2019 may, in part, be a late manifestation of a pattern we have seen in other nondemocracies that liberalized their economies and subsequently liberalized their political systems as wealth and demands for political freedoms rose.

These findings are not surprising. Most importantly, they offer rich opportunities to empirically examine complex relationships in which the direction of causation or support between any two variables may change over time and may be influenced by numerous other factors, including the level of development.