Freedom, Markets, and Well-being Fall 2018

The Capabilities Approach

Overview

The capabilities approach represents an alternative to the standard treatment of well-being in economics. Economists use indifference curves to measure well-being. Professor Brown showed us how to construct those curves based on observed choices; the result is what is called a utility function. The theory is that people are made better or worse off by moving to higher or lower indifference curves.

Utility functions are subjective: we could each have a different one. They also do not allow us to compare one person’s well-being against another’s. You may be on a very high indifference curve while I am on a very low one but we cannot say that you are better off than I am. We can only say that you are better off than you would have been if you were on a lower indifference curve and that I am worse off than I would have been if I were on a higher indifference curve. Finally, the point of utility theory was to predict behavior. It is often used for normative purposes because we assume that it is better to move a person to a higher indifference curve, other things being equal. But the theory was not developed with normative purposes in mind. If it had been, the barrier against interpersonal comparisons of utility would have been disqualifying.

The capabilities approach, by contrast, is objective, allows for interpersonal comparisons, and was developed for normative purposes. The theory has two elements: capabilities and functionings. Functionings are “beings and doings,” that is, things that people do, such as “eating regularly,” or qualities that they have, such as “being well-fed.” Capabilities are what economists call “opportunity sets.” Your capabilities are measured by the functionings that are available to you; they are the set of functionings that you have the opportunity of achieving, if you will.

Two supposed advantages

One thing said in favor of the capabilities approach is that it reflects the incommensurability of different values. According to utility theory, your well-being is determined by which indifference curve you are on; it doesn’t matter how you get there. Advocates of the capabilities approach think it does matter: there’s a difference between choosing to fast and involuntarily starving even though the fasting and starving people have similar utility.

The capabilities approach is also supposed to do a better job with what are called adaptive preferences than utility theory does. The problem of adaptive preferences is that people might have preferences that reflect misinformation or malign influences. So they may get what they choose, but their choices don’t reflect their real interests. Here’s an example Nussbaum gives, drawn from Sen (1984, 309).

For example, in 1944, the year after the Great Bengal Famine, the All-India Institute of Hygiene and Public Health did a survey in an area near Calcutta, including in the survey many widows and widowers. Among the widowers, 45.6 percent ranked their health as either ‘ill’ or ‘indifferent.’ Only 2.5% of widows made that judgement, and none at all ranked their health as ‘indifferent’ …. This was in striking contrast to their real situation, since widows tend to be a particularly deprived group in basic health and nutrition. (Nussbaum 2001, 79–80)

If you think that the capability of being healthy is an important one for well-being, the fact that the widows think they are fine doesn’t settle the question. They have to actually be fine and that is something they can be mistaken about.

I raised an objection here. I said that being healthy and fed are functionings, not capabilities. Capabilities are available functionings. Nussbaum wishes to avoid being paternalistic and so insists only that people have the important functionings available to them if they choose to pursue them. But if your preferences have been warped by your upbringing, your choices will be warped as well. So you might have the capability of eating well but still not achieve the functioning of eating well because you choose not to eat what you need. If so, the problem of adaptive preferences hasn’t really been solved.

Crystal pushed back here. She said the idea was that if you make the capability genuinely available, the adaptive preferences will change. I think that looking at Nussbaum’s distinction between internal and external capabilities would be interesting here (2011, 21–23).

A couple other things

We talked a little bit about whether Nussbaum’s list is culturally specific or whether it is truly universal.

We also talked about whether one implication of her position is that some disabled people do not lead fully human lives.

References

Nussbaum, Martha C. 2001. “Adaptive Preferences and Women’s Options.” Economics and Philosophy 17 (1): 67–88.
———. 2011. Creating Capabilities: The Human Development Approach. Cambridge: Harvard University Press.
Sen, Amartya. 1984. “Rights and Capabilities.” In Resources, Values, and Development, 307–24. Cambridge, MA: Harvard University Press.
———. 1993. “Capability and Well-Being.” In The Quality of Life, edited by Martha Nussbaum and Amartya Sen, 31–66. Oxford: Clarendon Press.