Analysis: The Capabilities Approach To Poverty

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Introduction

Poverty measures in the field of Economics can be used to predict, evaluate and describe a population. Different purposes and methodologies exist, that are appropriate for carrying out each of these tasks. The evaluative task of these measures is often a normative one and ergo, has moral foundations to it. We often evaluate policy and measures in different ways without clarifying their normative foundations.
Before the 1990s, policy emphasis was more on the growth of an economy as an end and individual human beings were important only so long as they helped in achieving that goal of economic growth. But some economists realised that there had been a reversal between ends and means when it came to formulating the correct economic
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The motivation behind the capabilities approach was the emergence of a basic needs approach, where scholars argued that poverty reduction should first focus on a basic set of needs. The capabilities approach provided greater clarity and philosophical foundation along these lines. This approach lies in the realm of normative economics and is an evaluative approach.

The Theory

Sen mentions that any theory of inequality and justice required the existence of a “space” where these terms existed. His view was that inequality should be measured in the space of “Capabilities”. The basic proposition of this approach is that

‘Social arrangements should be primarily evaluated according to the extent of freedom people have to promote or achieve the Functionings they value’

In other words, progress or development occurs when people have greater
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This is important because sometimes, a person may value certain beings and doings without reason to do so. For instance, a person may value indulging in Narcotics, but he does not have any ‘reason’ to value this act. A ‘vector of functionings’ are therefore, things we can actually choose or enjoy. Sen mentions that “The focus is on the freedom that a person actually has, to do this or be that, things that he or she may value doing or being”
Thus, all formulations of Capability have two parts:
1) Freedoms- actual and effective
2) Functionings- valuable beings and doings

Freedom itself, has two aspects to it, ‘Process’ aspect (or the ability to act on behalf of what matters, i.e, act as an Agent) and ‘Opportunity’ aspect (the opportunity to achieve valued functionings)

RESOURCES → CAPABILITY SET → FUNCTIONINGS → UTILITY

The above flow illustrates Sen’s framework. Resources are observable and vital instruments that help in achieving a decent quality of life, such as food, electricity, transport etc. The Capability Set is in another space, and contains the possible functionings (or valuable beings and doings) we can choose from. From the capability set, actual functionings are achieved. Utility is a different space from both resources and Capabilities/Functionings. It is the well-being or satisfaction attained by achieving a valued

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