Florida’s rise since 2009 has been nothing short of stunning. Most states have improved on freedom in that time if federalized policies are excluded; however, Florida’s post-2010 improvement has been the second greatest in the United States (after Wisconsin). Florida’s improvement has lain mostly in fiscal policy, where the numbers tell a consistent story: government consumption, local taxes, state taxes, debt, and government employment have all fallen as a share of the private economy. The only area of deterioration in fiscal policy has been liquid assets, which have fallen slightly. Florida has also risen from 35th on personal freedom in 2013 to 22nd today. Clearly, Florida’s state leadership—from governors Rick Scott and Ron DeSantis to recent pro-freedom speakers of the House—deserves great credit for making freedom a priority over the past decade.

South Dakota is the third-freest state. The last time it held the crown was 2010, and the last time it led on economic freedom was 2015. While the state has improved on all three dimensions of freedom since 2012, a few other states have improved faster.

Nevada comes in just behind South Dakota at number four. It has been a consistent top-five state, though others have leapfrogged it since 2000. Unsurprisingly, it has been the unchallenged leader in personal freedom for all 23 years in our data set. Freedom in Nevada declined with the legislature elected in 2006, but it has bounced back strongly since then. Overall freedom there today is as high as it was in 2000, and 2018 was the first year in which Nevada has been in the top 10 on economic freedom since 2006. So Nevada’s ranking isn’t just due to its less personally paternalistic ways.

Arizona is now just behind Nevada. It has seen the fourth most improvement since 2010. Its educational freedom leadership has now put it as high as second place on personal freedom for the first time ever. Former governor Doug Ducey was a major leader on educational freedom and regulatory reform. A small COVID-19 pandemic slide in fiscal policy has not negated the massive gains the state has made in that area over the past two decades.

Residents of these top-five states have much to be proud of, and the rest of us should be more willing to look to states like New Hampshire, Florida, South Dakota, Nevada, and Arizona as models to emulate. One interesting thing about these top five is that they have similar levels of freedom despite substantial differences in other respects.

When it comes to the bottom states, we see that the Empire State has consistently placed last. The difference between the scores for New York and New Hampshire corresponds to one and a half standard deviations on every single variable. New York also performs poorly across the board, but especially on economic freedom. Thus, New Yorkers feel the heavy hand of government in every area of their lives. Is it any wonder that people are fleeing the state in droves? According to the U.S. Census Bureau’s components of population change data, about 1.4 million people, on net, fled New York for other states between 2010 and 2019, a whopping 7.1 percent of the state’s 2010 population.¹ In calendar year 2019 alone, 185,000 more people moved from New York to another state than moved in.² During the COVID-19 pandemic, that rate of out-migration ballooned, causing historic levels of population loss, unsurprising given the policy responses from state and local leaders that alienated many, failed to contain the crisis, and harmed key parts of the economy.³ We used to caveat these findings by noting that international migration still helped New York avoid losing population, but no longer: the state has lost more than half a million people since July 2019.

Hawaii is no paradise when it comes to freedom. The Aloha State has declined gradually since the Great Recession, and that decline is even more precipitous once we take into account the effects of its native son’s PPACA or Obamacare, because Hawaii formerly had one of the most free-market health insurance systems in the country. Fiscal policy accounts for most of Hawaii’s decline, due to big increases in tax burden in 2011, 2012, and 2021, as well as additional increases in fiscal policy burdens in 2018 and 2019 (tax increases in 2021 will continue its woes into the next edition). Land-use, labor, and property and casualty insurance regulations have also gotten tougher since 2013. Since 2011, real income and income per capita growth have fallen behind the rest of the country, and Hawaii’s real per capita income is now ahead of only West Virginia and Mississippi.

California lives up to its big government reputation, coming in as the third-worst state for freedom. Its overall freedom (even controlling for federalization of some policies in an anti-freedom direction) has fallen since 2000, owing to declines in regulatory policy that have swamped improvements in personal freedom. State taxation rose substantially from 2011 to 2014, then leveled off before rising again in 2020 and 2021. Local taxes, debt, government consumption, and government employment have all fallen since the Great Recession. That helped improve fiscal policy in the years 2009 to 2011. From 2000 to 2012, California had the worst real personal income growth performance of any state other than Michigan. Since then, the economy has recovered somewhat. But fiscal policy has deteriorated again since the COVID-19 pandemic, and time will tell whether that presages another period of malaise for the Golden State. California’s personal freedom grew from 2008 to 2016, but other states have improved even faster in that dimension. Given some policy and cultural trends, we expect Sacramento to further burden state-level freedom ahead and undermine its natural economic advantages.

Number 47 New Jersey is substantially above California and just below Oregon. After a big drop in freedom between 2000 and 2009, it has remained fairly stable since, other than a 10-point drop in economic freedom in 2021. New Jersey has fallen to last place on regulatory policy but has managed to rise to 35th on personal freedom. Fiscal policy is trending down: taxes have risen since 2016 but are not yet as high as New York’s. We would expect some further convergence unless a different mindset emerges across the state.

Oregon’s deterioration has been long-term and sustained. It is the second most worsened state since 2000, after Hawaii (Table 3). Tax and regulatory burdens have risen, and although the state remains relatively personally free, other states have increased more on that dimension and passed it in the ranking. Land-use freedom took a big hit in 2019 despite the expansion of an accessory dwelling unit law because of the adoption of statewide rent caps, even as local zoning regulations continue to tighten. FY 2022 state-level tax burden rose to an all-time high of 7.1 percent of income, up from 4.9 percent in FY 2002. Over the same period, local tax burden has remained steady at 4.0 percent of income, just above the national average of 3.9 percent.

Figure 2 plots each state’s personal freedom score against its economic freedom score. There appears to be a small positive correlation between personal and economic freedom, but it is not statistically significant. Most of the top states on overall freedom do well on both economic and personal freedoms. However, a few states in the top 10, such as Tennessee and Georgia, still do relatively poorly on personal freedom but outstandingly well on economic freedom.

The outlier states are instructive. In the bottom part of the lower-right quadrant, we see economically freer, personally less-free states, such as Idaho, Wyoming, Georgia, Texas, Alabama, Kentucky, Arkansas, South Carolina, and Tennessee. Texas is a paradigmatic case, finishing dead last in personal freedom despite a top-10 economic freedom score. Texans may be unhappy with their weak personal freedom showing, but it reflects poor criminal justice policies and the fact that the Lone Star State is increasingly behind the curve on cannabis, education, and gambling freedoms. The Texas legislature could end its intransigence on education reform in 2023, thus improving its position, if it approves education savings accounts in a special legislative session that was in the works as we went to press.⁴

Oklahoma is an interesting case. It was a classic, stereotypical red state, performing well on economic freedom but poorly on personal freedom. However, since 2017, it has gained substantially on personal freedom (gun rights, marijuana and alcohol freedom, and criminal justice reform), whereas economic freedom has stagnated relatively. Given its openness to policy innovation, Oklahoma could stand to turn its attention to economic matters and outcompete neighbors like Texas and Kansas (the latter is great on regulatory policy but quite poor on fiscal policy).

In the upper-right quadrant are economically and personally free states, such as New Hampshire, Nevada, Arizona, Missouri, South Dakota, and Florida. Out on the bottom left are New York and Hawaii, which score relatively poorly on both economic and personal freedoms. New Jersey and Maryland are not as extreme as New York on economic freedom but still score quite badly on economic freedom and mediocre at best on personal freedom. Finally, in the upper-left quadrant are Vermont, Maine, New Mexico, and perhaps California and Oregon, which are performing poorly on economic freedom but doing a bit better on personal freedom (or, in the case of New Mexico, Vermont, and Maine, a lot better). These are the stereotypical left-liberal states that do well on personal freedom but are economically collectivist. Generally, then, conservative states do better than left-liberal states on economic freedom, and rural/western/New England states do better than urban/southern/mid-Atlantic states on personal freedom.

Figure 3 shows the evolution of nonfederalized overall freedom scores over time. There is a pronounced ladle shape since 2000, with an upward trend beginning in 2011 and then leveling off in 2020. When we include federalized policies, the average state score in 2022 is almost identical to the score in 2000. Thus, federal subversion of state autonomy has on balance been detrimental to the freedom that citizens have experienced since 2000. Indeed, in general, economic freedom has declined in the United States since 2000, but the blame for this trend essentially belongs on the federal government, not state and local governments.⁵

Change over Time

Table 2 pulls out the most improved and worsened states from year-end 2020 to year-end 2022. It is important to recognize that short-term changes will be caused by a great deal of noise in the fiscal data that may or may not be due to significant policy changes, especially since we lack local tax, debt, and cash data after FY 2021. Nonetheless, it is worth noting which states saw the most change in individual freedom in the period covered by our newest data.

Surprisingly, Connecticut is the state with the most improvement in 2021 and 2022. That gain has come from personal freedom, while a small improvement in fiscal policy has canceled out a small deterioration in regulatory policy. The biggest personal freedom changes were legalizing marijuana and abolishing qualified immunity in 2021.

Hawaii is far and away the state that worsened the most since the 2020 election. That decline is driven mostly by the higher state tax burden. However, the Aloha State also raised the minimum wage and saw land-use regulation increase further.

Table 3 showing changes over time (year-end 2000 to year-end 2022) highlights the big picture since our first comprehensive set of data in 2000 and is limited to nonfederalized policies. We have data for every year between those dates.

Over this long period, New Mexico, Florida, Arizona, and Wisconsin are all clustered together as the biggest gainers. New Mexico was the biggest surprise to us, but a recounting of its reforms shows why it has done so well. To start with, it was the third least free state in 2000 and last place on fiscal policy, so it had a lot of room to grow. The tax and government consumption and employment shares of the economy have fallen consistently. The government debt burden rose during the Great Recession but has been slashed in just the last few years and is now less than one-third of cash and security assets. On personal freedom, the state has legalized permitless open carry (2002) and shall-issue concealed carry (2004), legalized medical (2007) and recreational (2021) marijuana, legalized sports betting (2018), legalized physician-assisted suicide (2013), massively reformed civil asset forfeiture (2015), cut incarceration rates (starting in 2018) and drug arrest rates (starting in 2008), and limited qualified immunity (2021).

As previously discussed, Florida’s rise has been remarkable. It has gained primarily in the fiscal policy category, where the numbers tell a consistent story: government consumption, local taxes, state taxes, debt, and government employment have all fallen as a share of the private economy. It has also improved on personal freedom and gained relatively on regulatory policy (even as it has declined absolutely).

Arizona has made massive gains on fiscal policy and educational freedom. Government consumption declined from 11.6 percent of the economy in 2013 to 8.7 percent in 2022, with the biggest single-year drop coming in 2020. Government debt and employment also fell substantially during those years, whereas tax burden held steady. Arizona is also one of the few states not to suffer a significant decline in land-use and energy freedom over the past decades, perhaps in part as a result of its particularly robust regulatory taking compensation law. It adopted constitutional carry and legalized marijuana. It was the first state with a universal education savings account law. Unfortunately, its minimum wage has risen to internationally extreme heights, given average wages, and its restrictions on smoking and vaping have gone far. Arizona has seen ballot initiatives both give and take away freedoms.

Wisconsin was a bottom-10 state as recently as 2010. The partisan change in that state has corresponded with a change in freedom trajectory, beginning with Governor Scott Walker. Over the last 12 years, the Badger State has risen 20 places in the fiscal policy ranking, 19 places in the regulatory policy ranking, and 20 places in the personal freedom ranking. State taxes have fallen slightly and local taxes even more. The debt to assets ratio has improved, and government GDP share has fallen a lot. The state has resisted increasing zoning regulations, adopted right-to-work laws, no longer has a higher-than-federal minimum wage, deregulated telecom (2011), has not expanded occupational licensing significantly, enacted tort reform (2011), moved to shall-issue concealed carry (2011), legalized sports betting (2021), legalized raw milk sales (2015), expanded school choice (2013), held down cigarette taxes, and reformed asset forfeiture (2018).

Hawaii is our biggest loser over the two-decade period. As noted earlier, its tax burden increased and its fiscal freedom has declined. Land-use, labor, and property and casualty insurance regulations have gotten tougher since 2013, while its real income and income per capita growth have fallen behind the rest of the country.

Oregon and Vermont are the next states that have declined the most. Vermont provides a dramatic contrast with the freest state, its neighbor to the east, New Hampshire. Although many people outside of the Northeast confuse the two, Vermont is “Bizarro New Hampshire” or “Upside-Down New Hampshire” when it comes to freedom. Beginning in 1997, Vermont’s school funding system was dramatically altered in such a way as to cause a big increase in fiscal centralization. Property taxes are now considered a state tax rather than a local tax, although towns still have some control over the rate. More importantly, taxes have continued to go up despite the “fix.” State taxes have risen from 8.0 percent to 9.8 percent of the tax base (excluding motor fuel and alcohol and tobacco taxes), whereas local taxes have fallen only from 2.4 percent to 2.0 percent since 2000. Government employment and consumption have risen slightly as a percentage of the economy.

Regulatory policy has also gotten much worse, with the vast majority of the losses concentrated in land-use and environmental regulation. As near as we can tell using our admittedly imperfect data, residential building restrictions have tightened enormously. One reflection of that is the frequency of the term “land use” in appellate court decisions; that frequency is now much higher, when divided by population, in Vermont than anywhere else. Vermont has enacted one of the country’s most costly renewable portfolio standards.

Personal freedom has also grown little over this period despite marijuana freedom increasing substantially. Most of the country has gained more in personal freedom. Gun rights have declined slightly, while a large tobacco freedom decline has effectively cancelled out its freedom-enhancing change on cannabis. This latter point we find particularly rich given its hypocrisy from the public health standard that drove tobacco restrictionism.

Last, it is worth pointing out policy areas that have received significant attention throughout the 2000–2022 period. Tobacco policy is the most notable area in which state policies have become more restrictive of personal freedom, with significant increases in taxes, as well as greater and greater restrictions on where one can smoke. Laws dealing with domestic partnerships, civil unions, and gay marriage also changed dramatically, especially in the years 2010–2015. Criminal justice reforms have swept the country at both the federal and state levels. In fact, they became pretty much a transpartisan consensus issue where little opposition existed before the summer of 2020 created some turbulence in the air (especially on policing).

Civil asset forfeiture reform stands out here, as well as criminal penalties affected by criminal justice reform efforts. Marijuana laws are undergoing rapid liberalization, first in states with citizen ballot initiatives. Gun laws and education policies have been gradually liberalized across the country, and state bans on direct-to-consumer wine shipments have been removed in many places.

Gun policy has also seen significant changes. Despite a move in elite opinion toward greater restrictionism, the story at the state level has been liberalization. Republican states in particular have moved strongly toward dismantling their remaining restrictions, especially on concealed and open carry of handguns and so-called Class 3 weapons (machine guns, silencers, and short-barreled rifles and shotguns). Democratic states, meanwhile, have had to contend with judicial decisions restricting the extent to which they can regulate the possession and carrying of firearms. However, a handful of urban, left-of-center states continue to innovate with restrictive policies, such as design safety standards, large-capacity magazine bans, dealer regulations, universal background checks, safe storage laws, and ammunition microstamping requirements, most of which seem likely to survive Supreme Court scrutiny.

On the regulatory side, eminent domain reform occurred in some fashion in most states following the infamous Kelo v. City of New London decision by the U.S. Supreme Court in 2005. Several states have recently enacted right-to-work laws, and there is still some space for further change across the country. Policies dealing with new technologies—such as DNA databases, electronic cigarettes, and automated license plate readers—have also seen change. A quite significant arena for policy change occurred in the sports and online gambling area, with many states jumping on the betting freedom bandwagon. Several states also repealed Sunday sales blue laws to go along with more legalized marijuana, including some in 2023 that wouldn’t be captured here but would in the eighth edition. One might speculate that this is part of a trend of greater “lifestyle libertinism” over time—which has certainly benefited our political economy but it could be viewed with a jaundiced eye from the perspective of other values, such as overall human flourishing (especially if the arm of the state increases in other ways simultaneously, perhaps even related to that cultural trend). Of course, it could be that more Americans have simply come to appreciate that toleration is a better tool than legal punishment for promoting personal responsibility, or at least a healthier relationship between the state and society.

One ongoing feature of policy change is the displacement of state discretion with federal mandates, for both good and ill with regard to pure individual liberty (leaving aside the damage done to federalism, a long-term institutional bulwark of freedom). Federal courts have forced states to liberalize gun laws, sodomy laws, and marriage laws, though in all those areas state governments were reforming long before the federal courts chose to intervene conclusively. In health insurance regulation, all three branches of the federal government have acted in concert to dramatically raise the regulatory threshold, mostly via the PPACA. States may still choose to regulate health insurance even more tightly than the federal government, but they may not choose more market-oriented models of regulation. There has been one important exception to this trend: the individual health insurance mandate of the PPACA was stripped by Congress.

Leaving aside the cases where there has been liberalization at the federal level, centralization is a dangerous trend. For one thing, it reduces the ability of federalism as an institutional system to check government overreach. For another, it makes it harder for citizens to find freedom by voting with their feet, as they cannot go anywhere for different and better policies unless they emigrate to another country.

Construct Validity and Robustness

In this edition of the index, we test the construct validity and robustness of our overall freedom measure by examining correlations in overall freedom measures across editions (for the year 2006, which appears in all editions). Between the second and third editions, we switched from an impressionistic to a quantified “victim cost” method for weighting variables. Nevertheless, the correlation between the seventh-edition and first-edition scores for 2006 overall freedom is a hefty 0.82. The correlation between third- and fifth-edition scores is 0.88. These extremely high correlation coefficients suggest that the overall freedom ranking is robust to within-reason perturbations of weights on the variables and addition and subtraction of variables.

Index of Cronyism

As in previous editions, we present a “freedom from cronyism” state ranking that takes into account blatantly anti-competitive regulations: (a) general sales below cost/minimum markup law, (b) sales below cost/minimum markup law for gasoline, (c) certificate of public convenience and necessity for household goods movers, (d) direct auto sales bans, (e) certificate of need for hospital construction, (f) all occupational licensing variables, (g) eminent domain laws, (h) bans on direct shipment of wine, and (i) alcohol sales blue laws.

Table 4 shows how the states come out on cronyism in 2022 (higher values/lower rankings indicate less cronyism). The numbers in the table represent the weights of each variable multiplied by the standardized value (number of standard deviations greater than the mean). As noted in the previous section, a state that is one standard deviation better—freer—than the average on every single policy will score 1 on overall freedom. Because the index of cronyism draws on a subset of the freedom index, the values in this table fall within a much smaller range. Kansas’s score of 0.048, therefore, means that, taking cronyist policies into account, Kansas’s positions on those issues contribute 0.048 to its overall freedom score. Kansas is the least cronyist state. The freedom from cronyism index can be found in the “Regulatory” tab of the spreadsheet at www.freedominthe50states.org.

We compare our cronyism scores with state corruption scores based on a survey of statehouse journalists.⁶ The correlation between 2007 cronyism and 2007 corruption is –0.31, indicating that states scoring higher on freedom from cronyism score lower on corruption. In other words, cronyist states are more corrupt. The correlation weakens when cronyism is measured around the same time as corruption, perhaps implying a causal path from corruption to cronyism rather than vice versa.