The Impact of Economic Freedom on Public Health

The protection of public health is often a justificiation for increasing government power. But could increasing government power also have negative consequences, including for public health itself?
A new paper, “How does economic freedom influence public health? Evidence from U.S. cities” by economists Justin Callais, Kelly Hyde, Ilia Murtazashvili, and Yang Zhou, forthcoming in the Southern Economic Journal, investigates the relationship between economic freedom and public health, and finds evidence that the former may be good for the latter. Here is the abstract:

Although there is substantial agreement how microeconomic forces—income, risk aversion—shape public health outcomes, there is substantial disagreement about the relationship between macroeconomic forces—market liberalization and economic freedom—on public health. In this paper, we investigate the relationship between public health, economic freedom, and wealth using a large sample of metropolitan-level data from the United States. We find that economic freedom does have a statistically significant and positive impact on general, physical, and mental health, but the overall results are small in magnitude. When we disaggregate the three areas of economic freedom, we find that areas with lower government spending and freer labor markets have the strongest positive effect on physical and mental health. However, our results are strongest for the richest group of respondents, suggesting that the economic freedom-health relationship is perhaps indirect, and shown through income.

The authors note that their findings undermine efforts “to blame market capitalism, globalization, and neoliberal policies forworsening mental and physical health in the United States.” At the same time, they caution caution that there are reasons to question whether the findings show a causal relationship, in part because the research relies upon self-reported health data, but it nonetheless suggests the existence of health-related trade offs when government policies seek to improve public health.