Judicial independence and economic freedom in the US states

Abstract

This article addresses the extent to which differences in judicial independence across US states influence economic freedom by using the Fraser Institute’s Economic Freedom of North America Index. Overall, the results suggest that, as judicial independence increases within a state’s court of last resort, so does a state’s overall economic freedom score, along with each of the subcomponent index scores. These findings add important nuances to the literature and provide opportunities for future research.

Keywords:

• Judicial independence
• economic freedom
• credible commitments
• judicial selection

JEL Classification:

• D72
• H73
• O49

Notes

¹ Information on the indices as well as datasets are freely available at: www.freetheworld.com/efna.html

² See Hanssen (2004), Feld and Voigt (2003), and Dove (2015) for relevant overviews of this literature.

³ Data on judicial salaries come from The National Center for State Courts and are freely available at www.ncsc.org

⁴ Merit selection developed as a means to better insulate the judiciary from external bias and influence (Hanssen 2004). Usually, under this method, an independent commission provides candidates for selection by other branches of government. These individuals will then periodically face unopposed retention elections by the electorate, who are required to decide whether the given judge should remain on the bench.

⁵ This is done as there was little to no variation in the JI variables, meaning that panel data are not amenable to analysis.

⁶ Data for all control variables were taken from the US Census. Data are freely available at: www.census.gov