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Kentucky Ranked 43rd in Economic Freedom in New Report


Last month, the Fraser Institute released its Economic Freedom of North America 2019 report. This year's report is the 15th edition of the Fraser Institute rankings. The Fraser Institute's report utilizes 2017 data - the latest year for which all comprehensive information is available.

The rankings use 10 variables across 3 major areas: government spending, taxes, and labor market freedom. Together, these variables provide each state with an index score and ranking. As the report explains,

"Using a simple mathematical formula to reduce subjective judgments, a scale from zero to 10 for each component was constructed to represent the under-lying distribution of each of the 10 components in the index. The highest possible score on each component is 10, which indicates a high degree of economic freedom and the lowest possible score is 0, which indicates a low degree of economic freedom." (A full description of each variable and the report's methodology can be found in the report starting on page 11)

In the latest rankings, Kentucky receives a 5.25 overall score, leaving us ranked 43rd in the nation. While Kentucky's score is above the previous year (5.06), Kentucky is still nearly a full point below the average and still trailing its own 2015 score (5.36).

While Kentucky has improved in areas of taxes, government spending and labor market freedom, there is clearly room for improvement.

Equally concerning is that Kentucky continues to lag behind most of its neighboring states. In the most recent report, Tennessee is ranked 3rd, Indiana 11th, Ohio 37th, Illinois 34th, and West Virginia 49th. All five of these states saw improvement from last year's rankings.

Kentucky most notably lags behind in Area 1 of the rankings, government spending. In fact, Kentucky ranks exceptionally low in ranking 1B, transfers and subsidies as percentage of income. With a high percentage of Kentucky's population receiving transfer benefits, this is no surprise.

Policymakers should not be satisfied with a ranking of 43rd. Economic freedom is vital to economic success. Burdensome regulations, high taxes and market barriers only make Kentucky less likely to succeed. As the Fraser Institute notes, "The results of the experiments of the twentieth century should now be clear: free economies produce the greatest prosperity in human history for their citizens."

Interested in hearing a little bit more about the report? Dean Stansel, the report's author, will be joining the Pegasus Podcast this month to discuss! GET SUBSCRIBED now to get the episode as soon as it is released.


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