Measuring economic freedom during the Covid-19 pandemic

Abstract

The Covid-19 pandemic in 2020 led to extensive new government regulations and lockdown policies that, according to some prominent definitions, severely reduced economic freedom. However, many of these new pandemic-related regulatory restrictions on economic freedom are largely missed by the Economic Freedom of the World Report (EFW). This paper first adjusts the Our World in Data Covid-19 Stringency Index into a measure of lockdown regulatory freedom and then merges it into the EFW index to better measure countries' 2020 cross-sectional relative economic freedom. We find significant differences in the relative ranking of economic freedom between countries once we adjust for lockdown regulatory restrictions.

US state‐level economic freedom during the COVID‐19 pandemic

“…Specific spots in the free and unfree clusters may have changed, but overall states were grouped around their historical spots in the rankings with the few exceptions mentioned above. This contrasts with the findings in Miozzi and Powell (2023) where countries varied greatly in this regard, and historical levels of EFW were less correlated with the stringency of pandemic regulations. How initial levels of economic freedom impacted the severity of lockdown regulations across states and across countries is a topic worthy of further investigation.…”

“…The standard deviation in rankings from 2019 to 2020 was 5.37 following the first adjustment method and 4.39 using the second, compared with 3.25 in the unadjusted index. Though smaller in magnitude than the international findings in Miozzi and Powell (2023), the direction of states' movements in the rankings changes as well. Twenty-eight percent of states changed direction in their ranking movement following adjustment 1, and 22 percent of states changed direction following adjustment 2.…”

“…Benjamin Powell https://orcid.org/0000-0002-1054-4306 ENDNOTES 1 The following four paragraphs draw on descriptions from Miozzi and Powell (2023) since we are adjusting the subnational state-level lockdown stringency data the same way we adjusted national-level lockdown stringency data in that prior study. 2 The spreadsheets are available at the link provided on the title page but the link should be moved here once this paper is accepted and is no longer blinded.…”

“…Regardless of whether or not the policies governments adopted in response to COVID-19 improved health, economic, or political outcomes, these policies did constitute a significant decrease in individuals' freedom to engage in a wide range of economic activities. Miozzi and Powell (2023) was the first paper to measure how the various approaches to pandemic regulation impacted relative economic freedom across countries. They adjusted the Our World in Data COVID-19 Stringency Index into a measure of lockdown regulatory freedom and used it to adjust the Fraser Institute's Economic Freedom of the World Report (EFW) by Gwartney et al (2022) to better measure how economic freedom varied across countries during the pandemic.…”

“… 1 1 The following four paragraphs draw on descriptions from Miozzi and Powell (2023) since we are adjusting the subnational state‐level lockdown stringency data the same way we adjusted national‐level lockdown stringency data in that prior study. …”