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Institutions and Human Progress: An Analysis of International Pooled Data

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Abstract

This study investigates the impact of the components of economic freedom (Economic Freedom of the World Index, EFW) on improvements in well-being using pooled data of 105 countries spaced at 5-year intervals between 1990 and 2000. The EFW as well as other control variables are regressed on the log-odds ratios of the Index of Human Progress (IHP), a measurement of progress constructed by the Fraser Institute, and its components. Extreme bound analysis demonstrates that countries with a higher quality of government, well-defined property rights, sound money, limited trade restrictions, and limited regulation experience higher levels of human progress as measured by the IHP.

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Notes

  1. A more specific description of the data can be found in Gwartney and Lawson [2006].

  2. Unlike the HDI that ranges from 0 to 100 and can easily be normalized between 0 and 1 for log-odds transformation, the IHP has many values over 100. Thus, before transforming the IHP and it components, these are normalized so that the maximum value is 95.

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Acknowledgements

I acknowledge the helpful suggestions of Russell Sobel, Peter Leeson, Joyce Jacobsen, and three anonymous referees in constructing this paper. I am responsible for any remaining errors.

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Authors and Affiliations

  1. Department of Economics and Finance, University of Texas at El Paso, El Paso, 79968, TX, USA

    Nathan J Ashby

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  1. Nathan J Ashby
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Correspondence to Nathan J Ashby.

Appendix

Appendix

See Tables A1 and A2 and Figures A.

Table a1 Correlation matrix for the institutional variables
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Table a2 List of countries in sample
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Figures A1 and A2.

Figure A1
figure 1

Explanation on the Calculation of the Index of Human Progress (IHP).Note: Since the minimum and maximum values are taken from 1975, it is possible for the score to be below 0 or above 100.*Variable is not included in HDI.

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Figure A2
figure 2

Histograms for the IHP and its Components.Source: McMahon, 2002

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Ashby, N. Institutions and Human Progress: An Analysis of International Pooled Data. Eastern Econ J 35, 396–414 (2009). https://doi.org/10.1057/eej.2008.28

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