Race, Wealth, and Economic Freedom in North and South America

Previously, it has been shown that variation in intelligence and mean socio-economic status between the nations of North and South America can be partially accounted for by national variation in racial genetic admixture which in turn correlations with regional cognitive ability. It is also well known that, in the United States, Whites are more likely than non-Whites to favor “small government” economic policies, and that economic freedom correlates with national economic success. These observations lead to the following questions: is there a positive relationship between mean European admixture in a nation and how economically free it is? If so, does this relationship partially explain the association between European admixture and national wealth? Finally, is economic freedom predictive of national wealth even after controlling for European admixture and national IQ?

I investigated these questions using the national economic freedom index produced by the Fraiser Institute, racial admixture data from Fuerst and Kirkergaard (2016), data on GDP per Capita (PPP) from the World Bank, and national IQ data from Lynn and Vanhanen (2012). In total, 25 North and South American nations were included in the analysis.

Bivariate results initially suggested that there was no relationship between the racial demographics of a country and its degree of economic freedom:

However, the scatterplot of this relationship clearly suggests that there were two outliers, Venezuela and Argentina, which did not follow the pattern that the other 23 nations exhibited and had extremely low scores on the economic freedom index.

Removing these outliers produced a moderate correlation between % European and economic freedom (r=.301, p=.14, rho = .313, p=.13.). This relationship was not statistically significant, but nations are not samples drawn from infinitely larger populations, and so I don’t put much stock in the application of significance testing to national data.

Removing these two outliers also strengthened the relationship between GDP per Capita and IQ and economic freedom.

Multiple regression showed that, even after removing the outliers, the relationship between economic freedom and national wealth was not mediated by mean European admixture. Both variables accounted for independent variation in national wealth.

The relationship between European admixture and national wealth was completely mediated by national IQ. In contrast, economic freedom continued to predict national wealth even after controlling for both European admixture and national IQ. The results of these regressions were virtually the same when the Venezuela and Argentine were added back to the data set.

My takeaway: Whiter nations in the Americas tend to be slightly more economically free, but they are richer than average mostly because of their high IQs. That being said, economic freedom contributes to national wealth independent of race and explains a significant amount of the variation in national wealth not captured by IQ.

One thought on “Race, Wealth, and Economic Freedom in North and South America

  1. I know that you are just showing data and aren’t explicit arguing for that point.
    The fact that whiter countries are just slightly more economically free doesn’t necessarily mean that people with more European admixture are just slightly (negligibly) more pro policies that would increase economic freedom. This is because under representative democracy policies come in packages and not as individual policies. For example, a policy package can have both less regulations and less protection for private property.
    To find out how much does increased European admixture increases people’s tendencies for economic freedom, we would obviously have to measure both of those variables simultaneously. Unfortunately that kind of data doesn’t exist and probably never will.

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