Amartya Sen's Capability Approach and Its Application in the Hdrs

Introduction

Hitherto, development has been measured solely by economic indexes, such as accumulation of capital, utilization of international investment, GDP per capita, and many more. Such figures allow easy evaluation and comparison across borders, but fail to account for other less easily quantifiable factors that might also influence development. Recent studies on development look beyond purely financial measures like free choice, medical care availability, education, equality or political freedom.

Amartya Sen, Nobel Laureate in Economics, made a significant contribution with the concept of "capability" development, according to which government's performance should be evaluated against the capabilities of their citizens (Sen, 1979). Nevertheless, Sen recognized the relation to Adam Smith's (1776) analysis of necessities and living conditions and Karl Max's (1844) concern with human freedom and emancipation, but the strongest connection is with Aristotel's theory of political distribution and human flourishing (Clark, 2006).

The Capability Approach Explained

It might be easier to start by making clear what the capability approach is not: it does not aim to be a fully specified theory or a complete and standardized means of analyzing human development. Rather, it is a broad and deliberately incomplete normative framework for the evaluation of individual wellbeing and the design of social policies (Robeyns, 2003). The core idea behind it is the centrality of people, what they do and what they manage to be. It shifts the focus away from the traditional emphasis on income but it does not exclude it. It puts income in a different light – it is not money, but what people manage to achieve with money that matters (Sen and Nussbaum, 1993). Unlike all previous approaches, Sen's paradigm looks beyond mere commodities. It investigates what people are able to achieve with the goods and services they buy, which depends on several conversion factors: personal, social and environmental characteristics (Robeyns, 2003).

One cannot understand the insights of the capability approach without looking at two major concepts introduced by Sen. These are functionings and capabilities, concepts that are related but nevertheless distinct.

Functionings refer to the set of things one does in his/her life; what one manages to do and to be. Taken altogether, functionings are achievements that make a life valuable. They range from basic achievements such as being well-nourished and disease-free to more complex and volatile ones such as taking part in community life or having self-respect (Sen, 1992). On the other hand, capabilities are alternative combinations of functionings a person can choose from. They are equivalent with the real opportunities a person has and among which he/she can choose, thus incorporating the idea of freedom, which Sen calls agency - one's ability to pursue goals that one values (Robeyns, 2003). To summarize, a functioning is an achievement, whereas a capability is the ability to achieve. Sen acknowledges that different people might value different things. Thus his paradigm supports pluralism, the view that valid well-being and valid social welfare come in diverse forms (Alkire, 2002).

Indicators

There have been extensive attempts to apply Sen's capability approach. For this purpose reliable indicators are needed. The results one gets very much depend on the approach and on the indicators used. While Martha Nussbaum (2000, 2006) proposed a list of ten essential indicators to be used in all policy making and evaluations (see Appendix 1), Sen (2004) continuously argues that the list of capabilities should deliberately be left open. He claims that the selection of capabilities should be participative and open to criticism, as it depends on the purpose.

Measurement

Elementary functionings such as life expectancy, infant mortality, or adult literacy rate are relatively easy to measure, even on a cardinal scale. However, more complex functionings like achieving self-respect, taking part in social and or political life, being happy in one's job are more difficult to measure (Sen and Nussbaum, 1993). The most common instrument used for both basic and complex functionings, although yielding different degrees of validity and reliability, is the survey (see Appendix 2).

Applications

The capability approach can be applied in a wide range of fields, most prominently in welfare economics, inequality and poverty studies, social policy and development economics.

Welfare economics deals with the evaluation