Inequality, economic freedom and democracy: an open question?
This paper examines the relationship between inequality, economic freedom and democracy. We argue that the attitude towards economic inequality also depends on individual opinions about its relationship with other desirable or undesirable economic phenomena. Given the difficulty to define and measure the concepts of economic freedom and democracy, we consider the most widely used indices, respectively the Economic Freedom of the World Index (EFW) and the three indicators Index of Democracy, Freedom House/Polity, Index of Democratization, and we investigate their correlation with the Gini index. The empirical results suggest that there is no significant correlation between economic freedom and income inequality. By contrast, we find a negative correlation between democracy and income inequality.