What and how does the index of economic freedom measure?

The paper is aimed to demonstrate that annual Index of Economic Freedom actually describes not only country’s economic freedom level but also levels of other kinds of freedom. Analysis of Index components shows that most of them are dependent of civic and political freedom. And some components require social and cultural human rights to be treated well. Thus the Index may be used for comprehensive evaluation of freedom level in a country. The correlation between Index of Economic Freedom and other social, economic and political indexes is proved by Index’s authors and by the author of the paper. The greater economic freedom is correlated to higher per capita incomes and overall wellbeing, including such factors as health, education, innovation and democratic governance. Nevertheless there is some fuzziness in the index conception. Economists, journalists and other experts pointed out that above said correlations are not valid and that Index’s authors had overestimated benefits of free market and idealized libertarian ideas. Sure enough that it is hard to confirm the statement of Index’s authors that the global economic freedom has been rising since 1995. Methodology and the set of examined countries have been changing all the time. Understanding economic freedom as an attribute of a human being (not of a state) leads to taking population size into account. So it is proved in the paper that comparative analysis of Indexes between the nations should be based on population data. This approach shows that economic freedom is not so widely spread as the authors of 2017 Report claim. Although 51% of the world countries may be called “economically free”, there are only 31% of world population living in these countries. More than 2/3 of the people live in “economically unfree” countries. At the same time taking population size into account rises correlation coefficient between Index of Economic Freedom and GDP (PPP) per capita from 0,61 to 0,74 demonstrating strong correlation between human income and economic freedom.

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