Ryan H. Murphy

The relationship between income, economic freedom, and BMI

OBJECTIVES What explains increases in BMI (and obesity) over time and across countries? Although many microeconomic forces are likely explanations, increasingly scholars are arguing that macroeconomic forces such as market liberalism and globalization are root causes of the obesity epidemic. The purpose of this paper is to examine the impact of economic freedom on obesity conditional on the level of income and other factors. STUDY DESIGN We use an unbalanced pooled cross section of up to 135 countries for 1995 and 2000-2009. METHODS Our statistical model specifications include pooled OLS and fixed effects. RESULTS First, we find that controlling for fixed effects siphons off much of the relationship previously documented between economic freedom and BMI. Second, economic freedom is associated with slightly higher BMIs but only for men in developing nations. Lastly, we show that economic freedom increases life expectancy for both men and women in developing countries. CONCLUSION Therefore, policies aimed at reducing obesity that limit economic liberalism may come at the expense of life expectancy in the developing world.

Is human trafficking the dark side of economic freedom

Economic freedom has increased living standards worldwide. Concurrent with such gains are rising concerns about potential human costs associated with free markets. This paper uses data on human trafficking and anti-trafficking policies, in conjunction with a measure of economic freedom, to examine whether free markets exacerbate or attenuate the incidence of human trafficking and policies designed to combat it. We do not find evidence suggesting that economic freedom is associated with human trafficking. In addition, our results suggest that economically free countries are more likely to enact and enforce policies to fight human trafficking.

Economic Freedom of North America at State Borders

I use matched county pairs on either side of US state borders to investigate the causal effects of the Economic Freedom of North America index (EFNA) on local outcomes. This method is similar to Dube et al. (2010). I construct a panel of county pairs running from 1981-2012 and four measures of outcomes, logged real incomes, logged real per capita incomes, employment, and logged real wages, employing single year and five year differences-in-differences. I find small, but precisely estimated, effects on incomes but mixed effects on wages and employment. All regressions show low R^2. This supports the hypothesis that state-level economic freedom improves capital income or that it attracts capital income across state borders.

The Impact of Economic Inequality on Economic Freedom

This paper tests the hypothesis that the presence of economic inequality may lead to erosions of economic freedom. Using Economic Freedom of the World as a measure of free economic institutions, it finds that a one standard deviation increase in the gini coefficient reduces the presence of free economic institutions by 0.18 standard deviations. This effect is modest but not at all trivial, and the magnitude of the effect may be especially important in increasing the size of government. Surprisingly, the evidence is mixed for the effect of inequality on regulation, with modest evidence suggesting it may improve the regulatory environment. While many methods of reducing economic inequality involve restrictions on economic freedom, this evidence underscores the importance of stressing reforms free market proponents are confident will mitigate inequality.

DO INSTITUTIONS MITIGATE THE RISK OF NATURAL RESOURCE CONFLICTS

The resource curse, as manifested by an increased likelihood of conflict over rents, can be mitigated by institutions. Lei and Michaels find that discoveries of “giant” oil fields increase the likelihood of violent conflict, but they find no evidence that democratic institutions mitigate this risk. We test whether institutions mitigate the resource curse by reducing the risk of natural resource conflicts. Our results indicate that high quality economic institutions reduce the likelihood of territorial (separatist) conflicts following natural resource rent windfalls. Highly autocratic and highly democratic institutions also reduce the likelihood of territorial conflict after natural resource rent windfalls. (JEL Q34, O13, P48, D74)

Immigration Causes American Businesses to Fail and that is a Good Thing

Though counterintuitive, rates of business failure are effective proxies for entrepreneurship. We find that the foreign born population within US states is predictive of business failure ten years later. A one standard deviation increase in foreign born population corresponds to a 1.09 standard deviation increase in entrepreneurship thusly measured. We argue this is evidence that immigration leads to entrepreneurship and economic growth. The importance of entrepreneurship to economic growth is widely accepted. The role of immigration is more controversial. Concerns over potential costs of immigrants are making headlines in the popular press (Tumulty and Costa 2014; Debenedetti 2014) and some of the scholarly literature (Collier 2012; Borjas 2014). Most prominently, discussions of immigration center on its effects on labor markets and more recently, institutional quality. Less attention is given to their impact on entrepreneurship.

Intergovernmental Organisations and Economic Freedom: Wise Technocrats or Black Helicopters?

This article explores the relationship between country membership in major intergovernmental organisations and economic freedom. While it makes no claims to have found any broad theoretically bound, robust causal mechanism, baseline fixed effects models establish relationships amongst economic freedom and membership in the EU, NATO, WTO, UN, OECD, World Bank, and IMF. Though the results are not simple, the strongest findings are negative relationships with the UN, IMF, and WTO, and positive relationships with the World Bank and possibly the EU.

Do Economic and Political Institutions Mitigate the Risk of Natural Resource Conflicts

Despite repeated attempts to model conflict as contests over rent, few researchers have found a persuasive identification strategy to test these models. However, Lei and Michaels (2014) find that exogenous discoveries of “giant” oil fields are in fact associated with increased likelihood of violent conflict. Surprisingly, they do not find any evidence that political decision rules mitigate the effect of natural resource discoveries on the instance of conflict. This paper re-estimates Lei and Michaels’ model to test if their result is dependent on the institutional environment that prevailed at the time of the oil discovery. Results indicate that for conflicts over control of territory, strong economic and political institutions reduce the likelihood of conflict in the wake of the discovery of oil. This empirical finding is consistent with basic theoretical models of violent conflict.

The Rationality of Literal Tide Pod Consumption

At the conclusion of 2017, to the dismay of journalists, pundits, and academics, large numbers of adolescents began consuming Tide Pods, a form of laundry detergent that is candy-like in appearance. This paper argues that purposeful consumption of laundry detergent may in fact be individually rational for adolescents. The consumption of Tide Pods may allow adolescents to successfully signal status in accordance with the Handicap Principle, which explains the beauty of a peacock’s tail and the practice of stotting by gazelles in the wild. The Handicap Principle is also a common explanation of adolescents’ willingness to engage in dangerous activities, like drug use. A subtext of the thesis of this paper is the veracity of rational choice explanations in unconventional contexts distant from its original applications.

Applying Panel Vector Autoregression to Institutions, Human Capital, and Output

We apply System GMM and Panel Vector Autoregression (PVAR) to investigate the long run relationships between output, human capital, liberalized political institutions, and liberalized economic institutions. We find consistent evidence that economic institutions and human capital both greatly contribute to output. We also find, however, that political institutions typically have no discernable effect. We believe our methodology provides basis for the existence of causal relationships.