by Joel Wood, Ian Herzog
April 30, 2014
Economic freedom is the extent to which you can pursue economic activity without government interference as long as your actions don’t violate the rights of others. Pollution is generally given as an example of a situation where the economic actions of one person violates the rights of others, thus justifying government intervention. However, the same economic institutions that contribute to economic freedom—property rights, open markets, and a vibrant private economy—may actually lead to a cleaner environment. The 20 countries rated the most economically free by the Fraser Institute’s Economic Freedom of the World index experience much cleaner air quality than the 20 countries with the lowest economic freedom scores. We examine a multicountry data set for over a hundred countries spanning a period from 2000 to 2010 to identify the relationship between economic freedom and two environmental indicators (concentrations of fine particulate matter and carbon dioxide emissions).