Institutions and Human Progress: An Analysis of International Pooled Data Nathan J. Ashby Department of Economics and Finance, University of Texas at El Paso, El Paso TX 79968, USA. E-mail: njashby@utep.edu This study investigates the impact of the components of economic freedom (Economic Freedom of the World Index, EFW) on improvements in well-being using pooled data of 105 countries spaced at 5-year intervals between 1990 and 2000. The EFW as well as other control variables are regressed on the log-odds ratios of the Index of Human Progress (IHP), a measurement of progress constructed by the Fraser Institute, and its components. Extreme bound analysis demonstrates that countries with a higher quality of government, well-defined property rights, sound money, limited trade restrictions, and limited regulation experience higher levels of human progress as measured by the IHP. Eastern Economic Journal (2009) 35, 396–414. doi:10.1057/eej.2008.28 Keywords: institutions; economic freedom; progress JEL: H100; F100; P00; O340 ‘‘Where you live should not decide whether you live or whether you die.’’ —Paul Hewson (aka Bono), 2004. INTRODUCTION The amount of literature on the effect of economic institutions — in particular, economic freedom — on growth is significant. The evidence seems to strongly favor sound property rights and its positive effect on economic growth. However, there has been criticism of the use of growth in GDP per capita as a measurement of overall well-being or quality of life [Sen 1999; Bauer 2000]. Such criticism has been rejoined by various studies that have demonstrated that economic freedom positively influences other measurements of life satisfaction such as human poverty measures, literacy, overall education, life expectancy, and mortality rates [Esposto and Zaleski 1999; Norton 2003]. The Human Development Index (HDI) has been used by the United Nations and is a weighted index measuring income, education, and health of 162 countries [UNDP 1999; 2001]. This analysis contributes to these studies in two ways. First, an alternative measurement of human progress from the Fraser Institute will be used, the Index of Human Progress (IHP), which includes additional indicators of well- being including the attainment of technological goods [Emes and Hahn 2001; McMahon 2002]. Specifically, the IHP consists of measurements of GDP per capita, education, technology, and health. It also is a better measurement of how countries progress through time. Regressions will be run on the index as a whole and on its individual components. The Economic Freedom of the World Index (EFW) is made up of five subcomponents measuring the size of government, property rights policy, monetary Eastern Economic Journal, 2009, 35, (396–414) r 2009 EEA 0094-5056/09 www.palgrave-journals.com/eej/