Faculty Advisory Board Profile: Robert Lawson

Our Faculty Advisory Board is an essential part of The SMU Mission Foods Texas-Mexico Center, guiding us and supporting our mission to improve relations between Texas and Mexico through dialogue and research. Board Member Richard Lawson discusses his involvement with the Center and his work on the Economic Freedom of the World (EFW) index.

Why did you decide to become a Faculty Advisory Board Member of the Texas-Mexico Center?

One of the projects that I help manage is the Economic Freedom of North America (EFNA) index, which is co-authored by Dean Stansel, who is a faculty member in the Bridwell Institute and also a member of the Faculty Advisory Board for the Texas-Mexico Center. The EFNA index measures economic freedom at the state (or provincial) level across the three countries of North America. It makes sense for both Dean and I to become involved with the Texas-Mexico Center in light of our work trying to measure economic freedom across the U.S. and Mexican states. At the O’Neil Center, we collaborated with the Texas-Mexico Center on a very successful public event a couple years ago, and I am hoping we can do so again soon as the Bridwell Institute.

You are the Director of SMU’s Bridwell Institute for Economic Freedom. Can you tell us more about the Institute and your role in advancing its mission?

Robert Lawson

The Bridwell Institute for Economic Freedom is a research institute in the SMU Cox School of Business. The Institute was recently established with the generous support of Mr. and Mrs. Tucker Bridwell (BBA ’73, MBA ’74) and expands upon the mission of its predecessor, the William J. O’Neil Center for Global Markets and Freedom. The mission of the Bridwell Institute is to foster the scholarly study and intellectual discussion of the nature, consequences, and causes of economic freedom in our local, state, national, and international communities.

Personally, I teach economics in our MBA and EMBA program. As the director, I wear several hats. We have a team of eight faculty and two staff that I manage. On the research front, the faculty direct themselves, but we focus on research related to the various economic freedom indexes, such as the Economic Freedom of the World (EFW) index that I co-author. The institute also has a few large public events each semester, an extracurricular reading group program for about 60 SMU undergraduates per semester, a faculty seminar series, and a “Teaching Free Enterprise” program, which runs dozens of economic education workshops for teachers around the state. I am also responsible for fund-raising to make sure we have the resources we need to continue operations.

You are a co-founder of the Economic Freedom of the World annual report. How did you decide to start it and why do you feel it is important to look at economic freedom in other countries and not only in the U.S.?

Back in the late 1980s, Milton Friedman and Michael Walker (founding president of the Fraser Institute in Vancouver) decided we needed an empirical measure of economic freedom in order to study how capitalism works in a more scientific and less ideological way. I fell into it because my graduate school mentor, James Gwartney at Florida State University asked me to work with him in creating a prototype index. We presented our work to Milton Friedman, Douglass North, and a host of other esteemed economists in 1992, and got the go-ahead from the Fraser Institute to develop a publishable version, which we released in 1996. We’ve been updating and improving the index annually ever since.

Presently, the EFW index covers 162 countries and has data back to 1970 – and in some cases back to 1950. It has been used in thousands of academic studies, and we’re extraordinarily proud of its impact on the scholarly debate. In a review article I wrote a few years ago with Josh Hall at West Virginia University, we concluded, “Over two-thirds of these studies found economic freedom to correspond to a ‘good’ outcome such as faster growth, better living standards, more happiness, etc. Less than 4% of the sample found economic freedom to be associated with a ‘bad’ outcome such as increased income inequality. The balance of evidence is overwhelming that economic freedom corresponds with a wide variety of positive outcomes with almost no negative tradeoffs.”

Tell us about your latest research projects.

Aside from continually updating and revising the EFW index, currently I am working on a study to measure the effect of economic freedom on both income shares and income levels throughout the income distribution. It turns out that while countries with more economic freedom may tend to have less equal distributions of income, people at all tiers of the income distribution in more economically free nations have higher actual levels of incomes. Most recently, I published a study to examine whether countries that liberalized more quickly did better or worse than those that do so more slowly, finding that fast liberalizers did better than slow liberalizers. I also just published a paper examining the impact of the economic liberalizations of [the country of] Georgia’s Rose Revolution.

Robert Lawson is a Clinical Professor and holds the Jerome M. Fullinwider Centennial Chair in Economic Freedom; he also is director of the Bridwell Institute for Economic Freedom at the Southern Methodist University (SMU) Cox School of Business. He earned his PhD and MS in Economics from Florida State University and his BS in Economics from the Honors Tutorial College at Ohio University. He previously taught at Auburn University, Capital University, and Shawnee State University.

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