Texas ranks the 2nd most economically free state, tied with Florida, in the U.S. according to the Fraser Institute. This ranking is based on levels of taxes, government spending, and labor market freedom. Figure 1 shows states that rank in each quartile of economic freedom.

Figure 1: Economic Freedom Ranking by State


Research finds that higher economic freedom is overwhelmingly linked to a variety of economic benefits, which is why Texas cannot rest on its laurels but rather continue to free Texans from unnecessary economic barriers to competition.  

Here are three of the many findings:

  • People prosper more from increased entrepreneurial opportunity: Greater degrees of economic freedom associated with encouraging “opportunity entrepreneurship” and discouraging “necessity entrepreneurship.” Opportunity entrepreneurship is an opportunity that inspires someone to capitalize on market niches and fill new demands. Necessity entrepreneurship occurs when a person is forced to engage because of a lack of alternatives, which often results in failure.
  • People prosper less from burdensome regulation: Less economic freedom from increased regulation reduces business competition, prohibits start-ups, slows employment growth, particularly among smaller firms, and harms consumers through higher prices.
  • People prosper more by expanding economic freedom: Economic freedom positively correlates with income growth in all states and negatively relates with income inequality in low-income states.

Therefore, higher levels of economic freedom tend to promote entrepreneurship, employment growth, income growth, and income equality. Texas should continue expanding economic freedom by reducing government spending, taxes, and burdensome regulations to let Texans prosper.