Freedom in the 50 States Teaser #3: Weighting the Variables

The new, book-length edition of Freedom in the 50 States: Index of Personal and Economic Freedom will be released on March 28 by the Mercatus Center at George Mason University. In the days leading up to release, I will be “teasing” a few of the novel findings and methods from the study. Here at Pileus, I’ve already posted a couple of teasers over the past few months, linked here:

• “A Thought Experiment on Freedom“
• “The ‘New Hampshire Advantage’: Nearly Killed Off in 2009-10“

This post will explain the logic and method behind the weighting scheme in the new edition. Every index of freedom has to use some way of weighting its variables to come up with an aggregate measure of freedom. The Heritage Foundation’s “Index of Economic Freedom” and Fraser Institute’s “Economic Freedom of the World” and “Economic Freedom of North America” essentially weight each variable equally, either within categories that are themselves weighted equally in the overall index (Fraser) or across the index as a whole (Heritage). The most commonly used international indices of democracy, Polity IV and Freedom House, and the first two editions of Freedom in the 50 States use “arbitrary” weights, that is, the researchers weight the categories according to their own judgment using general criteria.

We were unsatisfied with all of these approaches, as well as with inductive statistical alternatives known as “principal component analysis” and “factor analysis.” Here is how we put the case in the book:

Because we want to score states on composite indices of freedom, we need some way of “weighting” and aggregating individual policies. One popular method for aggregating policies is “factor” or “principal component” analysis, which weights variables according to how much they contribute to the common variance—that is, how well they correlate with other variables.

Factor analysis is equivalent to letting politicians weight the variables, because correlations among variables across states will reflect the ways that lawmakers systematically prioritize certain policies. Of course, partisan politics is not always consistent with freedom (e.g., states strong on gun rights tend to be weak on gay rights). The index resulting from factor analysis would be an index of “policy ideology,” not freedom.

Another approach, employed in the Fraser Institute’s “Economic Freedom of North America,” is to weight each category equally, and then to weight variables within each category equally. Of course, this approach assumes that the variance observed within each category and each variable is equally important. In the large dataset used for the freedom index, such an assumption would be wildly implausible. We feel confident that, for instance, tax burden should be weighted more heavily than court decisions mandating that private malls or universities allow political speech.

Previous versions of this index used a subjective weighting system, based on a rough assessment of the importance of each policy in terms of the number of people affected and the value they were likely to place on their infringed freedom. We were dissatisfied with the imprecise and subjective manner in which we constructed those weights, and for this edition we have tried to use a much more objective and independent measure of the “value” of each freedom.

The new, “objective” method of weighting variables is what we call the “freedom value” approach. Here is how we describe it:

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My Introduction to Political Philosophy Final Exam

Here are the essay questions from the final exam I gave in “Introduction to Political Philosophy” last semester. How would you answer these questions?

3.1
Rights to Property
Answer one of these questions.
1. What is John Rawls’ “difference principle,” and how does he defend it?
What are its implications for the welfare state? Is the argument persuasive?
Why or why not?
2. Robert Nozick criticizes “patterned” principles of justice in holdings, like
Rawls’, on the grounds that they authorize unjust redistribution of wealth.
Why do patterned principles authorize redistribution? Why is redistribu-
tion unjust? Are those arguments persuasive? Why or why not?

3.2
Evaluating Moral Arguments
Answer one of these questions.
1. Evaluate the soundness of the following argument. “1. It is morally imper-
missible to take away anyone’s life, health, liberty, or possessions without
her clear consent. 2. Governments take away people’s possessions (taxa-
tion) and liberty (imprisonment) in certain circumstances. 3. Therefore,
governments must obtain the clear consent of every person they govern.
4. Virtually no government on earth has obtained the clear consent of ev-
eryone they govern. 5. Therefore, virtually all governments systematically
violate the rights of their subjects.”

2. Evaluate the soundness of the following argument. “1. It is morally
impermissible to allow someone to die when one could save that person
without sacrificing anything of comparable moral significance. 2. The
consumption of luxury goods is not of comparable moral significance to
human life. 3. Therefore, if one can save another person’s life merely
by transferring money that one would otherwise have used to purchase
luxury goods, one is morally bound to do so (i.e., it would be morally
impermissible not to). 4. Today, people in the rich world have surplus
money that they spend on luxuries, money that we know could save lives in
the poor world. 5. Therefore, people in the rich world are morally bound
to transfer money that would otherwise be spent on luxuries to people in
the poor world who would otherwise die.”

Notably, only one person who answered 3.2.1 thought the argument was sound, and only a small number of students who answered 3.2.2 thought this argument was sound. Both arguments are valid.

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“Neoclassical Liberalism,” Property Rights, and Capitalism

Matt Zwolinski and John Tomasi have a thought-provoking piece entitled, “A Bleeding Heart History of Libertarianism,” in the latest Cato Unbound. They criticize postwar libertarians (specifically mentioning Mises, Rand, and Rothbard) for seeing property rights as absolute and, in their view, regarding the welfare of the working poor as irrelevant to moral justifications for capitalism:

In the remainder of this essay, we will discuss one particular way that neoclassical liberalism has a better grounding in the libertarian intellectual tradition than the libertarianism of Mises, Rand, and Rothbard. It is not the only contrast, but one of the clearest and most important differences between these two schools of libertarian thought has to do with the proper nature of concern for, and obligation to, the working poor. On this issue, the neoclassical liberal position is that the fate of the class who labor at the lowest end of the pay scale under capitalism is an essential element in the moral justification of that system. And this position, we will argue, has a far more solid grounding in the libertarian intellectual tradition than the justificatory indifference to which the postwar libertarians are committed.

They go on to cite John Locke, Adam Smith, and Herbert Spencer (yes, Spencer!) as classical liberals who would be more sympathetic to the neoclassical-liberal project of justifying markets partly on the basis of their consequences for the welfare of the least well off. However, they also argue, plausibly, that Rand and Rothbard in particular were not indifferent to the fate of the poor, simply that they viewed the coincidence of respect for individual property rights and a better life for all as a happy fortuity. (Mises was more of a consequentialist and perhaps after all a comfortable fit within neoclassical liberalism.)

I would stress that

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