Economic freedom (Index of Economic Freedom) vs Income inequality (Gini coefficient) in 153 countries [OC]
Submitted by Independent-Ad-514 t3_10tvelu in dataisbeautiful
This should be in “data is ugly”. There is no trend to this plot.
All data is beautiful.
This one shows there is no correlation whatsoever between the Gini coefficient and the index of econocmic freedom.
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.
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.
Correlation does not equal causation.
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.”
I studied development and development economics. The reality is much more complex.
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.
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)
I meant 0.1. And I squared the r to get r squared.
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