Economic Freedom and Public, Non-Market Institutions: Evidence from Criminal Prosecution

Claudio Detotto and Bryan McCannon

No 15-16, Working Papers from Department of Economics, West Virginia University

Abstract: Economic freedom, which measures the protection of property and freedom to contract, is generally argued to capture the quality of a state’s institutions regarding market activity. As to be expected, numerous studies have found that economic freedom is associated with good economic outcomes. Additionally, much effort in public economics has worked to identify the features of quality non-market public institutions. No effort has been made to connect institutions that influence market activity and institutions that govern non-market activities. We take a first step. We employ a linear programming method for measuring relative efficiencies known as Data Envelopment Analysis. We apply this technique to information on the use of inputs to the production of the prosecution of crime across the thousands of local prosecutor offices in the U.S. We then compare state-level measurements of prosecution productivity with data on state-level economic freedom from the Economic Freedom of North America index. We show that there is a positive and statistically significant relationship between the two. Those states that develop institutions respecting economic freedom also tend to be the states that develop efficient publicly-provided services.

Keywords: Data Envelopment Analysis; economic freedom; efficiency; prosecution; publicly-provided services (search for similar items in EconPapers)
JEL-codes: C67 D23 D24 D61 H11 K4 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2015-02
New Economics Papers: this item is included in nep-eff and nep-law
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Related works:
Journal Article: Economic freedom and public, non-market institutions: evidence from criminal prosecution (2017)
Working Paper: Economic freedom and public, non-market institutions: evidence from criminal prosecution (2016)
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