A note on economic freedom and political ideology

ABSTRACT

Within the field of public economics, there is the perception that Republicans are associated with ‘small government’ and Democrats with ‘big government’. We test this notion by examining whether economic freedom is affected when a single party is in control of the state legislature. We find no link between party control and our main economic freedom indicator, but we do find a positive link between Republican control and the taxation component of economic freedom, suggesting a Republican legislature leads to lower taxation.

KEYWORDS:

• Economic freedom
• political parties
• public economics

JEL CLASSIFICATION:

• H00
• H70
• R5

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Note that Nebraska is excluded from our sample as state representatives do not have formal affiliations with political parties.

² We use the ‘state-local government’ index for our freedom measures.

³ This empirical approach is similar to Reed (2006).

⁴ See Bjornskov and Potrafke (2013) and Hoover, Compton, and Giedeman (2015).