Does Economic Freedom Foster Tolerance? Niclas Berggren, Therese Nilsson Article first published online: 11 APR 2013 DOI: 10.1111/kykl.12017

Abstract: Tolerance has the potential to affect both economic growth and wellbeing. It is therefore important to discern its determinants. We contribute to the literature by investigating whether the degree to which economic institutions and policies are market-oriented is related to different measures of tolerance. Cross-sectional and first-difference regression analysis of up to 69 countries reveals that economic freedom is positively related to tolerance towards homosexuals, especially in the longer run, while tolerance towards people of a different race and a willingness to teach kids tolerance are not strongly affected by how free markets are. Stable monetary policy and outcomes is the area of economic freedom most consistently associated with greater tolerance, but the quality of the legal system seems to matter as well. Through instrumental variables and first-difference results we find indications of a causal relationship.

When two Swedish economists set out to examine whether economic freedom made people any more or less racist, they knew how they would gauge economic freedom, but they needed to find a way to measure a country's level of racial tolerance. So they turned to something called the World Values Survey, which has been measuring global attitudes and opinions for decades.

Among the dozens of questions that World Values asks, the Swedish economists found one that, they believe, could be a pretty good indicator of tolerance for other races. The survey asked respondents in more than 80 different countries to identify kinds of people they would not want as neighbors. Some respondents, picking from a list, chose "people of a different race." The more frequently that people in a given country say they don't want neighbors from other races, the economists reasoned, the less racially tolerant you could call that society.

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  • India and Jordan by far the least tolerant. In only two of 81 surveyed countries, more than 40 percent of respondents said they would not want a neighbor of a different race. This included 43.5 percent of Indians and 51.4 percent of Jordanian.1
  • 1. source: http://www.washingtonpost.com/blogs/worldviews/wp/2013/05/15/a-fascinating-map-of-the-worlds-most-and-least-racially-tolerant-countries/