Chapter 10: Capabilities and wellbeing
The capability approach (CA) has been initiated and guided by Amartya Sen since the 1980s as an alternative to neoclassical welfare economics. The approach emerged gradually out of his rich critique of mainstream economics, in particular his dissatisfaction with conventional notions of rationality (e.g. in Rational Fools, Sen, 1977), efficiency (e.g. in Impossibility of a Paretian Liberal, Sen, 1970), utility (e.g. in On Ethics and Economics, Sen, 1987), wellbeing (e.g. in Development as Freedom, Sen, 1999), and justice (e.g. in The Idea of Justice, 2009). Arising out of this critique, the CA can be characterized as an alternative approach to the analysis of poverty and wellbeing, one that has tried to find a middle ground between purely subjective theories of wellbeing on the one hand, such as the preference-based neoclassical paradigm, and, on the other hand, purely objective theories focusing on goods or, a bit less objective, needs. In the CA, it is people’s capabilities to function that is the central focus of wellbeing analysis – in other words, what people are able to be or do, rather than what they have in terms of income or commodities. This chapter will show that, methodologically, the CA differs from neoclassical economics in some important ways. Most basically, the CA replaces utility with capabilities as the relevant informational space for analysis, and it substitutes a conception of rationality as utility maximization with the notion that people choose ‘what they have reason to value’ in order to lead a flourishing life.
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