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November 2014 - Volume 22, Number 4


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Rich States, Poor States, 2014 Edition

By Arthur B. Laffer, Stephen Moore, and Jonathan William


Throughout the country, states are looking for ways to energize their economies and become more competitive. Each state confronts this task with a set of policy decisions unique to its own situation, but not all state policies lead to economic prosperity.


Using years of economic data and empirical evidence from each state, we identify which policies can lead a state to economic prosperity. Rich States, Poor States not only identifies these policies, it also makes sound research-based conclusions about which states are poised to achieve greater economic prosperity and which are stuck on the path to a lackluster economy.


The 2014 Economic Outlook Ranking is a forward-looking measure of how each state can expect to perform Rich States, Poor Stateseconomically based on 15 policy areas that have proven, over time, to be the best determinants of economic success. Each of these factors is influenced directly by state lawmakers through the legislative process. The top five states in this year’s report are Utah, South Dakota, Indiana, North Dakota, and Idaho. The five worst are New York, Vermont, Illinois, California, and Minnesota.


The Economic Performance Ranking is a backward-looking measure based on a state’s performance on three important variables: State Gross Domestic Product, Absolute Domestic Migration, and Non-Farm Payroll Employment – all of which are highly influenced by state policy. This ranking details states’ individual performances over the past 10 years based on this economic data. The top five in this evaluation are: Texas, Utah, Wyoming, North Dakota, and Montana. The five worst include Michigan, Ohio, New Jersey, Rhode Island, and Illinois.


The State of Iowa ranks a solid middle-of-the pack 25 on the Economic Outlook Ranking, dropping from 23 and 22 in previous years. On the Economic Performance Ranking, Iowa’s score was slightly better, at 24. State Gross Domestic Product ranked highest at 15 with a cumulative growth of 54.6 percent between 2002 and 2012, followed by a 19 rank and cumulative growth of 4.9 percent on Non-Farm Payroll Employment, and a poor showing of 34 on Absolute Domestic Migration, with a cumulative loss of 27,470 people between 2003 and 2012.


Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index is an annual economic competitiveness study authored by economist Dr. Arthur Laffer; Stephen Moore, chief economist at the Heritage Foundation; and Jonathan Williams, Director of the Tax and Fiscal Policy Task Force at the American Legislative Exchange Council. Reprinted with permission, <> accessed on October 26, 2014.


Rich States, Poor States Historical Ranking


ALEC-Laffer State Economic Competitiveness Index


IOWA ECONOMIC SCORECARD is our quarterly economic forecast, arriving in February, May, August,
and November. It consists of statistics about and analysis of the Iowa economy.


IOWA ECONOMIC SCORECARD is published by Public Interest Institute at Iowa Wesleyan College, a
nonpartisan, nonprofit, research and educational institute whose activities are supported by contributions from private individuals, corporations, companies, and foundations. The Institute does not accept government grants.


Contributions are tax-deductible under sections 501(c)(3) and 170 of the Internal Revenue Code.


Permission to reprint or copy in whole or part is granted, provided a version of this credit line is used: “Reprinted by permission from IOWA ECONOMIC SCORECARD, a quarterly newsletter of Public Interest Institute.” The views expressed in this publication are not necessarily those of Public Interest Institute. They are brought to you in the interest of a better-informed citizenry because IDEAS DO MATTER.




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