The index of economic freedom: methodological matters

Issaka Dialga and Thomas Vallee

Studies in Economics and Finance, 2021, vol. 38, issue 3, 529-561

Abstract: Purpose - The purpose of this paper is to deal with methodological issues in the Index of Economic Freedom (IEF) building by using principal components analysis (PCA) and benefit of the doubt (BOD) methods to generate component- and country-specific weights in computing the scores. Design/methodology/approach - The paper uses endogenous model and country-specific weight system to generate country-specific score unlike the equal weight used by the Heritage Foundation. Findings - The PCA and BOD analyses provide consistent results that differ dramatically with the baseline ones (results using equal weights). Research limitations/implications - The limitation of the paper is that the results change depending on the method used. Practical implications - Given results provided by the PCA and BOD analysis, the IEF would receive broad legitimacy basing the calculation of its scores on endogenous weighting models. Social implications - As composite indicators are essential in public debates and policies, their construction must be objective and well-known by a large public, making the methodological matters in composite indexes building one of the big challenge to researchers and a major democratic issue. Originality/value - The originality of the paper is to use endogenous approach to generate weights and countries’ scores.

Keywords: Benefit of the doubt weighting system; Country ranking; Index of economic freedom; Principal components analysis (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
Working Paper: The index of economic freedom: methodological matters (2018)
Working Paper: The Index of Economic Freedom: Methodological matters (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:sefpps:sef-07-2015-0181

DOI: 10.1108/SEF-07-2015-0181

Access Statistics for this article

Studies in Economics and Finance is currently edited by Prof Niklas Wagner

More articles in Studies in Economics and Finance from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().