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SteveInMotion t1_j7bputd wrote

Reply to comment by B33rP155 in Economic freedom (Index of Economic Freedom) vs Income inequality (Gini coefficient) in 153 countries [OC] by Independent-Ad-514

Granted the slope m is not very steep, but it would indicate a general trend correlating economic freedom with equality of opportunity, hence lower Gini coefficient.

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Downtown_Gear8588 t1_j7c8ol5 wrote

Correlation does not equal causation.

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SteveInMotion t1_j7cjw51 wrote

Statistically true. In this case you can observe it happening in real life and understand how economic liberty reduces inequality. As Bono said, “I thought that if we just redistributed resources, then we could solve every problem. I now know that’s not true. There’s a funny moment when you realize that as an activist: The off-ramp out of extreme poverty is commerce, it’s entrepreneurial capitalism.”

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Downtown_Gear8588 t1_j7cp262 wrote

I studied development and development economics. The reality is much more complex.

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SteveInMotion t1_j7d3fmu wrote

I’ve lived and worked in so-called developing countries, and, on a more modest scale than Bono, worked on relief efforts. I think Bono is on the right track. And I agree with you that it’s complicated.

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boldjarl t1_j7bu4qs wrote

The r^2 is less than 0.1, there is no trend to see.

Edit: decimal point.

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rfkile t1_j7bwdgk wrote

Unless a relationship is absolutely perfect and there's no noise whatsoever, you'll have an r^(2) less than 1. A value of r^(2) less than 1 doesn't mean "no trend." It just means "there's some fraction of the dependent variable that isn't controlled by the independent variable."

Also worth mentioning that the value OP provided is r (probably the Pearson Correlation Coefficient) rather than r^(2) Coefficient of Determination. While certainly, you can look at the graph and see plainly that the r^(2) is less than 1, it's important to distinguish between r and r^(2)

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boldjarl t1_j7byzef wrote

I meant 0.1. And I squared the r to get r squared.

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