What Is The Capability Approach In Economics?

What Is The Capability Approach In Economics?

The capability approach in economics is an approach to understanding development, options and approaches for the well-being of individuals, societies and the planet. While traditional economic models focus on wealth, growth and material wellbeing, the capability approach takes a more holistic approach, aiming to identify and measure the various capabilities individuals possess and how these can be enhanced and shared to improve living standards and human dignity.

The capability approach was developed by Harvard professor and Nobel Prize winner Amartya Sen, who argued that economic growth and development could not be judged solely by income levels, but by the actual capabilities of individuals to lead the lives they choose. Rather than viewing individuals in terms of the goods and services they can consume, this approach looks at their abilities to perform functions that are important to their well-being, such as access to education, health care, and essential goods and services.

Understanding the Capability Approach

The capability approach is based on two fundamental principles:

1. Every person’s basic needs should be met.

2. Every person should have the opportunity to develop and use their capabilities.

The capability approach stresses the importance of providing everyone with the opportunity for self-fulfillment and autonomy, rather than just focusing on poverty alleviation and the redistribution of resources.

The basic premise of the approach is that governments should provide individuals with the opportunity to develop the capabilities necessary for them to lead lives that are not only materially secure, but are meaningful and rewarding. This can be achieved by investing in a range of public services such as healthcare, education, transportation systems and housing. It also means that governments should create a supportive legal and regulatory environment, which allows individuals to make life choices in a secure and equal manner.

Advantages of the Capability Approach

1. Focuses on Human Well-Being: The capability approach does not measure economic success purely in terms of economics, but also takes into account measures of human wellbeing. In contrast to traditional economic models which focus on material wealth, the capability approach looks at the actual capabilities individuals possess and how these can be enhanced to improve their lives.

2. Enhances autonomy: The capability approach encourages individuals to make decisions based on their own interests and preferences. This offers people an alternative to traditional economic theory, which tends to treat individuals as passive recipients of economic resources.

3. Provides a Holistic Approach: The capability approach takes into account various aspects of individuals’ lives, such as their physical, mental and spiritual health. This means that policies implemented to improve living standards must take into account wider social, economic and environmental factors.

4. Encourages inequality-reducing measures: The capability approach encourages the implementation of policies to reduce inequality and ensure the equitable distribution of resources. This means that instead of solely focusing on redistribution of income, the capability approach looks at ways to ensure that everyone has access to public services, such as health care and education.

Drawbacks of the Capability Approach

1. Difficulty in Measuring: The measurement of capabilities is difficult because it is an abstract concept that cannot be accurately quantified or measured.

2. Amartya Sen’s Theorem: The capability approach is closely linked to Amartya Sen’s Theorem, which suggests that development should be based on a person’s relativistic capabilities, rather than absolute measure of wealth and products. This theory has been criticized as being too complex and removed from reality.

3. Not Open to Testing: The capability approach is not amenable to testing and experimentation due to its abstract nature. This makes it difficult to evaluate its effectiveness in terms of economic policy.

The capability approach in economics is an approach to understanding development, options and approaches for the well-being of individuals, societies and the planet. Rather than looking at individuals in terms of the goods and services they can consume, this approach looks at their abilities to perform functions that are important for their well-being, such as access to education, healthcare, and essential goods and services. The capability approach has many advantages, such as the ability to focus on human well-being and autonomy, a holistic approach that takes into account wider social, economic and environmental factors, and the promotion of inequality-reducing measures. However, the approach also has some drawbacks, such as difficulty in measuring capability and criticism of Amartya Sen’s Theorem. Despite these drawbacks, the capability approach can be used to design policies and create development strategies to reduce poverty and improve living standards for individuals and societies.