Sources :https://en.wikipedia.org/wiki/List_of_countries_by_income_equality

https://en.wikipedia.org/wiki/Index_of_Economic_Freedom

Tool: Microsoft excel

Just glancing at the figure, it seems like Sudan, Venezuela, and Zimbabwe are outliers. I'm wondering what the correlation coefficient would be if you neglected those.

Gotta know who that is at around 69,24

Slovakia, I believe

Gini coefficient is absolutely shit as a measure of anything useful, its worth reminding. Its skewed toward small populations and shit economies.

This should be in “data is ugly”. There is no trend to this plot.

I would question your regression line

Is this a real trend line?

Microsoft Excel

Yes from Microsoft Excel

They exist.And their existence on these locations is a fact, We can not ignore facts

Isn't more government control supposed to reduce inequalities

The concept of applying a linear line of best fit to such a random dataset is really dumb

It is not random. There is -0.31 correlation

this economic freedom is pure garbage

The fact that they exist doesn't mean that their situations are necessarily comparable to those of other countries. There may very well be unique facts that impact your situation. You choosing to include those countries without considering whether there are any special circumstances may itself be ignoring the facts.

Economic Freedor is not equivalent to goverment control

It’s evidently a big factor however - “Economic Freedom” is pushed by the Heritage Foundation and the Cato Institute, and a big factor is “freedom” from regulation, taxes, etc.

TBH inequality isn't an issue if the poorest person is a millionaire. The issue is if the people on the lower end have a dignified standard of living.

It is directly proportional

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.

Government often intends to reduce inequalities but the unintended consequences are the opposite. 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.”

I could generate really random data, and more often than not get something like this correlation out of it.

An r of 0.31 is an r^2 of 0.096. Having an r^2 less than 0.4 is hard to make an argument you really have anything

That is very, very close to random.

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

Edit: decimal point.

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)

Countries with more economic freedom have more economic equality and more wealth

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

These is a r of 0.8 for black and Hispanic population as a percentage to homicide rate.

Would you accept that as causal?

I am not American, but I believe that statistics are important and we should pay attention to them.

hell yeah B)

It is worth pointing out what exactly the "Index of Economic Freedom" is measuring, however. If you take a look at the methodology you will notice many curious things about it - the index includes many measurements of effective governance that are not directly related to what laws or policies are on the books or what people talk about when they typically talk about "economic freedom" (as in to what degree is the government corrupt and to what degree is the government capable of enforcing the laws and policies it has on the books, or to what degree are economic transactions inhibited not necessarily by any formal restriction on it but by the government's inability to secure said transactions). Furthermore, the methodology even goes so far as to simply take economic outcomes that are more or less universally viewed as good and treat their presence as constituting economic freedom - a very specific example would be inflation, where a weighted average rate of inflation over the past three years is factored in to their measurement of economic freedom, meaning that a hypothetical government that engaged in interventionist practices to temper inflation would score higher on economic freedom in regards to this particular metric than a hypothetical government that refrained from engaging in interventionist practices to curb a relatively higher degree of inflation. The Index of Economic Freedom is not just a measurement of this sort of libertarian notion of economic freedom, but to a large extent is just a measurement of effective governance and even just good economic outcomes (as opposed to laws or policies).

This says nothing. Correlation does not equal causation. Not that's there's much Correlation here... what's the p value?

Correlation does not equal causation.

There can be a correlation without there being a direct causal correlation

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.”

All data is beautiful.

This one shows there is no correlation whatsoever between the Gini coefficient and the index of econocmic freedom.

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

I agree that all data is beautiful, however data analysis and interpretation can be ugly. Putting a trend line on a plot and interpreting a correlation that doesn’t exist is certainly ugly.

Came here to say that. R-squared would be 0.09, then? Without a p-value, it means nothing.

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.

Where did you get that idea? The data set doesn't provide any support for it.

That r2 makes the line useless

Nop, If you check the Economic Freedom Index some items need more government control, like property rights or judicial effectiveness.

relevant xkcd

Just look at country names on the left and on the right

So how would you solve the crime issue knowing it's single mother and or racial components?

Yes. That's what the guy above me is talking about. Because the fitness of the line is low, you likely should not put much stake in a low correlation.

OP: Could you please explain what the Gini coefficient of Income Inequality and the Index of Economic Freedom are?

I meant stuff like restrictions on business and stuff

> Yes. That's what the guy above me is talking about. Because the fitness of the line is low, you likely should not put much stake in a low correlation.

No, these are different. There can be causation with low correlation. But high levels of correlation doesn't necessitate causation.

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