On correlations

This summer has seen plenty of crowing from the right over a connection between "economic freedom" (as defined by various corporate think tanks) and GDP levels. But for those of us who see obvious problems with treating GDP as the sole measure of a society's accomplishment, that raises an obvious follow-up question: how do the measures of economic freedom stack up against a society's inequality (which of course has much more to do with social well-being than GDP levels)?

We're probably a long way from conclusively answering that question. But let's take a quick first look.

The chart below contains information from three sources: the most recent UN data on inequality as measured by Gini coefficient (from 2007-2008), and the 2008 economic freedom indices from the Cato Institute and Heritage Foundation. The country set is identical to the one used by Richard Wilkinson and Kate Pickett in The Spirit Level.


I'll leave it to others more statistically-inclined to look at the question in more detail. But based on at least a first back-of-the-envelope chart, there appears to be a small but direct correlation between inequality and the type of corporate-friendly policy that's constantly pitched as somehow necessary to support social gains. And if we can say that decisions about "economic freedom" in a developed country are based on a trade-off between equality (which has been shown to correlate to scores of key social outcomes) and GDP (which hasn't), then there's ample reason to think the right is on the wrong side.