I’ve read their methodology several times, the actual one on their page! It changes often! I used to defend them when I was a young libertarian lad, but even then I was frustrated by their subjectivity. They don’t even factor in government ownership of wealth.

Ben Burgis has a good takedown of both Heritage and Fraser’s “freedom” indices, the main point being that little of their methodology has to do with anything libertarians or socialists would argue about, and is instead heavily weighted around things like Integrity of the legal system and Impartial courts, and other metrics that aren’t unique indicators of a free market. Heritage will claim these as qualities for a healthy business atmosphere, but they bias the index toward functioning, high gdp-per-capita societies. I think that bias is intentional.

If you read the index and think “wow, all the most livable countries have high free market ratings” then it’s working as intended.