On real economic freedom

Among the various concepts of freedom important for economics, ranking or measuring the freedom of choice provided by budget sets has an important place. The volume ranking has strange properties and cannot be justified by unit invariance and symmetry. The pointed distance (of the budget hyperplane from the origin along some line) provides a measure or ranking that coincides with the standard “purchasing power” or real income. The linear price index is practically unavoidable for measuring or ranking freedom. This is applied to the determination of income distribution and taxation implied by the equal freedom of choice of different domains. Concepts of equal or compared potential freedoms and utility-freedom relate freedom analysis to the basic classical concepts of fair allocation (equity-no-envy, egalitarian equivalence, etc.). The crucial difference between the two opposite concepts of invariance in comparisons is emphasized.