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States with fewer COVID restrictions are in better financial shape

May 7, 2020

Adam McCann just wrote an article about a cool analysis of state coronavirus restrictions at WalletHub. That analysis ranked the 50 states on an index based on nine different measures like large crowd restrictions, mask requirements, travel restrictions and other metrics. He grouped the states in four main buckets – states with few restrictions and high COVID death rates, states with few restrictions and low COVID death rates, states with many restrictions and low COVID death rates, and states with many restrictions and high COVID death rates.

Looking over the WalletHub overall 50 state ranking, you can see a tendency worth exploring further – states ranking near the top of their list (with fewer restrictions) tend to be states with governments in better financial condition than the ones that rank near the bottom of the list (states with higher restrictions). 

The 10 states ranking with the fewest restrictions were (in order) South Dakota, Utah, North Dakota, Missouri, Idaho, Tennessee, Montana, Texas, Florida, and Iowa. The 10 states at ranking from 41-50 (with the most restrictions) were (in reverse order) Hawaii, Rhode Island, Illinois, Pennsylvania, New Jersey, New York, Massachusetts, Ohio, Connecticut, and Delaware. 

Truth in Accounting (TIA) calculates an overall measure of state government financial health, which we call “Taxpayer Burden,” and ranks the states on that measure. For the 10 states with the fewest restrictions in the list above, TIA calculates an average “Taxpayer Burden” that is actually a “Taxpayer Surplus” of $2,500 (per taxpayer). For the 30 “in-between states” (for the WalletHub COVID Restrictions ranking), TIA calculates an average “Taxpayer Burden” of $4,300. For the 10 states ranking with the most COVID restrictions (including the likes of Illinois, New York, New Jersey and Connecticut), Truth in Accounting calculates an average “Taxpayer Burden” of $31,700.

The chart below, based on data drawn from Truth in Accounting’s “Data-Z” website, shows 5 groups of 10 states each, based on WalletHub’s COVID Restrictions ranking, and how those groups (from left to right, states with progressively more COVID restrictions) rank on average on a) TIA’s Taxpayer Burden, b) a “Paternalism Ranking” independently calculated by the Mercatus Center at George Mason University, and c) the number of lawyers active and resident in the state, per capita (lower lawyer-intensive states are to the left in the chart, along with low-COVID restrictions states).

The 50-state correlation is strongest with TIA’s Taxpayer Burden. 

 
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