Economic Policy Review ISSN 1313 - 0544

Mises, Hayek and Friedman are winking to us with the secret of longevity

Author: Metodi Lazarov / 09.09.2008
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Ludwig von Mieses died at the age of 92, Friedrich Hayek at almost 93, while Milton Friedman at 94. The three great economists, very knowledgeable in economic theory, leaders of the ideas about market order, had long and fruitful lives. Here arises the interesting question, whether or not their exclusive economic rationality or simply chance of nature gave them such long and useful lives. Naturally, if we add Keynes, who lived 63 years and Marx who lived 65, this logic will fail before its testing (that is the reason why we would not illustrate this introduction with them - purely non-ideological reasons). Let us use the age of the three liberal economists as the main idea for this article and look for a correlation between rational behavior and quality of life.  

Rational behavior is a concept which has different interpretations. Let us assume that a person is most rational when he has the greatest personal freedom such as the absolute right to private property and freedom of movement.  In other words, the individual has the right to decide how to use his time and talents, but he has no right to violate the basic right of other individuals and hence he does that which gives him the greatest benefits individually. Here, however comes the function of the state - to build a system, which offers stable currency, insures the accurate and unbiased execution of various types of contracts, protects its citizens from aggressors, which aim to take away their private property and provides the so call "public cervices" such as street lights, fire protection etc. If we combine the two concepts personal freedom and government intervention, an individual enjoys fully his freedom when the government interventions are at their minimum. The index of the US foundation Heritage shows that the average value for the EU-27 is 70.3, which falls in the second category from the top as "Mainly free" and is on the 29the place in the overall ranking, with an average value for the World 60.6 and for the entire Europe 67.5.  The USA is fifth in the ranking with 80.6, i.e. with over 10 points above the average for Europe (even though the UK is with 79.5, Denmark - 79.2, Estonia -77.8 etc.).

Let us take the original idea for life expectancy as a measure for its quality (we avoid including subjective parameters such as happiness). Data of the world Bank shows the that life expectancy in the Euro zone is 80 years, while in the USA it is between 77 and 78 years in recent years. For Bulgaria this indicator has a value of 73 years, but with an index for economic freedom of 62.9. Taking the risk of making conclusions without statistical tests, we could easily note that the citizens of freer countries have a longer life expectancy. Naturally the life expectancy directly depends on the available income and the access to health care, which however are easily available when there is greater economic freedom, which allows for greater public wealth.

Within this framework, it is interesting to add, that according to a study by Wilkinson (1992)[i] about the interrelations between incomes and mortality, he discovers that the change in the incomes of the poorer has a greater effect on their life expectancy than to the wealthier parts of the population, in other words the effect of wealth dies out or is delayed. Our recommendation for the long term thinking statesmen is to aim to improve the economic freedom in Bulgaria, because such steps lead to increased wealth and than a better quality of live in our country. The best proof is the demonstrated rationality of the liberal economists (at least in that sample), where may be is hidden the secret of long live.

[i] Wilkinson, R. G., Income distribution and life expectancy BMJ: British Medical Journal, 1992