Report

Links Between Economic Development and New Measures of LGBT Inclusion

March 2018

This study uses three new measures of LGBT inclusion–the Global Acceptance Index, the Legal Count Index, and the Legal Environment Index–to test previous findings linking LGBT inclusion to a country’s economic performance.

Highlights
The Legal Count Index tallies the number of LGBT-supportive laws in a country and the Legal Environment Index measures patterns of adoption of the laws.
All three measures showed a positive correlation between LGBT inclusion and GDP per capita.
Legal rights and social acceptance may be stronger predictors of GDP per capita when combined than when they are alone.
Data Points
$1,506
increase in GDP per capita associated with a one-point increase on the Global Acceptance Index
$1,694
increase in GDP per capita associated with one additional legal right
$8,259
increase in GDP per capita associated with the most inclusive Legal Environment Index
Report

Executive Summary 

This study provides new evidence that the inclusion of lesbian, gay, bisexual, and transgender (LGBT) people is linked to economic performance. A large and growing body of research documents the violence, discrimination, and social stigma experienced by LGBT people in every country that has been studied. These experiences at the individual level limit LGBT people’s access to jobs, to schooling, to health care services, to political participation, and to participation in their families, for example. All of those effects create barriers to full participation in the economy for LGBT people, which could also reduce economic output more generally.

We test the link between LGBT inclusion and Gross Domestic Product (GDP) per capita at the macroeconomic level. We predict that countries with more inclusion will have higher GDP per capita. To assess this prediction, we study more than 120 countries between 1990 and 2014.

To measure inclusion, we draw on three new measures: (1) a Legal Count Index (LCI) that counts the number of LGBT-supportive laws, (2) a Legal Environment Index (LEI) that measures patterns of adoption of laws in countries, and (3) a Global Acceptance Index (GAI) that is estimated from public opinion data. We combine these measures with economic data from the Penn World Tables and run regressions that control for country-level fixed effects and year effects.

Key Findings

  • As in prior research, we find a positive correlation between LGBT inclusion and GDP per capita with the three different measures of inclusion. While this kind of analysis does not prove causality, it does indicate a strong statistical association between LGBT inclusion and higher GDP per capita.
  • Variations in the Legal Count Index and the Legal Environment Index appear to be more important for explaining variation in GDP per capita than is the Global Acceptance Index. This finding could reflect the greater importance of legal rights in symbolizing and enacting the inclusion of LGBT people, but it could also reflect a Global Acceptance Index that is constructed from insufficient data on public opinion for some countries.
  • Some evidence emerges that the number of legal rights and the degree of public acceptance reinforce each other. With the Legal Count Index—but not the Legal Environment Index—an interaction measure combining the effect of acceptance and legal rights appears to explain variation in GDP per capita.

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Links Between Economic Development and New Measures of LGBT Inclusion