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Does Economic Freedom Foster Tolerance?


  • Niclas Berggren,

    1. Research Institute of Industrial Economics (IFN), Stockholm, Sweden
    2. Department of Institutional Economics, University of Economics in Prague, Czech Republic
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  • Therese Nilsson

    1. Department of Economics, Lund University, Lund, Sweden
    2. Research Institute of Industrial Economics (IFN)
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    • The authors wish to thank Andreas Bergh, Christian Bjørnskov, Lina Maria Ellegård, Maja Schmaljohann, Alois Stutzer, two anonymous referees, seminar participants at Lund University and the University of Economics in Prague, and participants in the 2nd World Congress of the Public Choice Societies in Miami, the 70th Midwest Political Science Association conference in Chicago, the European Association of Law & Economics conference in Stockholm and the Southern Economic Association conference in New Orleans for useful comments and suggestions. Financial support from the Marcus and Amalia Wallenberg Memorial Fund Foundation (Berggren), the Swedish Research Council (Berggren), the International Centre for Economic Research (ICER) (Berggren), Jan Wallander and Tom Hedelius Foundation (Berggren and Nilsson), Sida/SAREC (Nilsson) and Stiftelsen Partnerskapet (Nilsson) is gratefully acknowledged.


Tolerance has the potential to affect both economic growth and wellbeing. It is therefore important to discern its determinants. We contribute to the literature by investigating whether the degree to which economic institutions and policies are market-oriented is related to different measures of tolerance. Cross-sectional and first-difference regression analysis of up to 69 countries reveals that economic freedom is positively related to tolerance towards homosexuals, especially in the longer run, while tolerance towards people of a different race and a willingness to teach kids tolerance are not strongly affected by how free markets are. Stable monetary policy and outcomes is the area of economic freedom most consistently associated with greater tolerance, but the quality of the legal system seems to matter as well. Through instrumental variables and first-difference results we find indications of a causal relationship.