Special Issue “Capability Approach and Multidimensional Well-being in High-income Countries”

Abstract

This article is the Introduction to the Special Issue on “Capability Approach and Multidimensional Well-being in High-income Countries”. The volume offers an in-depth investigation of the major methodological challenges faced in the attempt to measuring and analyzing well-being in high-income countries and portrays people's well-being conditions in different European countries. It contains seven papers, which are an interesting combination of theoretical, methodological, and empirical works. The common denominator is the endorsement of Amartya Sen's capability approach as conceptual framework guiding the analysis.

Keywords:

• human development
• well-being, poverty
• measurement
• high-income countries

JEL classifications:

• I300
• O150
• I310
• D630
• C430

1. Objectives of the Special Issue

The performance (development, growth, well-being, progress, etc.) of high-income countries has been generally analyzed using traditional economic indicators, among which income is the most important. Even the current economic crisis in Europe and in the USA is examined on the basis of its effects on standard parameters, such as the public debt to gross domestic product (GDP) ratio, the deficit to GDP ratio, the rate of growth, or, eventually, the unemployment rate. Apart from the latter indicator, little or no attention is drawn to relevant well-being dimensions such as education, health, housing, quality of work, and participation in social life. This happens although in the last two decades there have been a large proliferation of contributions in the field of alternative measures of well-being and quality of life made by international organizations, research centers, national institutes of statistics, and civil society organizations. This is a clear sign that these initiatives are not yet able to affect the way policy-making is done and to shift the attention of politicians and media toward noneconomic parameters.

Why? We argue that one of the main reasons consists of the lack of an adequate conceptual framework and methodological rigor to analyze and measure phenomena such as well-being, quality of life, and human development. Too much effort has been devoted to identify the right statistical methodologies to construct complex measures, and too little to investigate the theoretical aspects. Even the powerful “Beyond GDP” initiative of the European Union and the Organisation for Economic Co-operation and Development (OECD) presents several weaknesses.1 In particular, it brings together indicators that are rooted in very different—and not always compatible—conceptual frameworks, some of which still based on a money metric.

The present Special Issue aims at overcoming some of these problems, by offering an in-depth investigation of the major challenges faced in the attempt to measuring and analyzing well-being in high-income countries, highlighting the type of information that can be given to policy-makers, and by portraying the people's well-being conditions in different European countries.

We endorse the capability approach as main conceptual framework as it is the most appropriate to portrait and analyze people's real-life conditions. This approach, initially elaborated by the Nobel Prize economist Sen (1985, 1999) and then extended by many other scholars such as Richard Jolly, Frances Stewart, Ingrid Robeyns, and Martha Nussbaum, is centered on three core concepts. The first one is “functionings,” which consist of people's achievements, what they manage to be and to do in their life. The second one is “capabilities,” which include all achievable—but not necessarily achieved—functionings and therefore reflect their substantive freedoms to be and to do the things they have reason to value. Functionings and capabilities range from elementary, such as being in a good health and being educated, to more complex, such as being able to participate in public life. The premise of Sen's (1985) capability approach is that the acquisition of income, like that of primary goods and other resources, is only one of several means to well-being, and not an end in itself. The relationship between income and commodities on the one hand, and capabilities and functionings on the other hand is mediated by the so-called (personal, social, and environmental) “conversion factors.” By measuring well-being in the space of functionings, we focus on the outcomes; thus, we account for people's differences in terms of age, sex, metabolism, health conditions as well as in the different context in which they may live (different environment, law, customs, etc.).

The third pillar of the capability approach is “agency,” i.e., the person's ability to pursue and realize her goals, not necessarily corresponding to her well-being. Recognizing people not as simple beneficiaries of public interventions but as agents of change has tremendous implications on policy-making. Traditional top-down interventions such as food transfer should leave space to more active welfare policies, which aim at empowering people, i.e., expanding their agency. Only an in-depth investigation of the conditions of poor and vulnerable groups can help to identify the constraints they face and, therefore, the policies that should be implemented to enhance their well-being.

This Special Issue in Forum for Social Economics contains some of the first outputs of a National Research Project, titled “Measuring human development and capabilities in Italy: methodological and empirical issues.” This project, which is funded by the Italian Ministry of Education, University and Research, involves five universities throughout the country. It aims at operationalizing the capability approach in high-income countries in general, and particularly in Italy. The Special Issue is composed of papers from the Roma Tre University research unit and of other papers focusing on two other European countries, namely the UK and Germany.

Most of the applications of this approach and most of the studies on human development, a concept elaborated by the United Nations Development Programme (UNDP, 1990) and theoretically rooted in the capability approach, have focused on low- and mid-income countries. This is partly because of the specific mission of the UNDP. Though few empirical studies of human development have concerned high-income countries, the approach is perfectly applicable in these contexts and its operationalization is very much needed to compare between- and within-country performances.

Measuring well-being through the capability approach is challenging as it implies making choices that necessarily involve value judgments. Examples of these choices concern the well-being dimensions, the indicators, and whether to aggregate indicators within a single composite index or not.

The volume focuses on Italy, Germany, and the UK for three major reasons:

• These are probably the countries that have contributed the most to the advancement of the studies on the capability approach and human development.

• All these countries are characterized by, historically shaped, territorial disparities. Large gaps exist, for example, between the North and the South of Italy, between the West and the East in Germany, and between the metropolitan area of London and the other regions/cities of the UK. These disparities have been traditionally examined in economic terms, for instance looking at the convergence in GDP growth rates between regions. This conventional analysis has proved to be of limited utility in highlighting the territorial gaps among areas very different from a cultural, natural, and institutional point of view.

• Another important reason to focus on the above list of countries is the recent improvement in the statistical information. In the past 4 years the Italian National Institute of Statistics (ISTAT) has shown significant interest in the theme of well-being in many ways. The first is the inclusion of specific questions on welfare and quality of life satisfaction within the traditional Multipurpose Household Surveys system. The clear signal of a new direction in the work of the Institute, however, occurred in 2010 with the launch, jointly with the National Council for Economy and Labour (CNEL), of a national research program aimed at creating a “Steering Committee on measuring the progress of the Italian society” (CNEL & ISTAT, 2013). In Germany, the government uses the capability approach as conceptual framework for the analysis of poverty and wealth in the country (Arndt & Volkert, 2011), though not yet for the measurement of these phenomena. Moreover, the extensive German Socio-Economic Panel offers a unique opportunity to analyze poverty and well-being in a multidimensional setting. In the UK, in October 2007 the government has appointed a “Equality and Human Rights Commission” to monitor the fulfillment and protection of human rights and the different forms of inequalities.2 Its very first work was to understand what human rights mean in Britain nowadays, and therefore to inquire on the well-being dimensions considered as valuable by the society.

2. Why a Special Issue?

In our view, a Special Issue of a journal like Forum for Social Economics is the best tool to disseminate a comprehensive set of information on the above topics. The papers included here are strongly inter-linked, as they were thought in this way since the very beginning of the Research Project. Therefore, this package does not put together contributions presented in an international conference or a symposium, but are rather the result of a longer process of discussion and dialog among the authors and other scholars involved in the project. It offers a combination of theoretical, methodological, and empirical works, which shed light on important aspects related to the operationalization of the capability approach in terms of measurement and analysis and its ability to orient policy-makers. Therefore, we strongly believe that this Special Issue could become an important reference for the emerging literature on human development, well-being, poverty, local development, and social indicators in high-income countries. Moreover, it contributes to the discussion on these topics in Forum for Social Economics, where interesting theoretical and empirical articles have been recently published (e.g., Beja, 2014; van Staveren, Webbink, de Haan, & Foa, 2014).

3. Contents of the papers

This Special Issue contains, in addition to the present Introduction, seven papers. In Table 1, we classify each paper as “theoretical,” “methodological,” and/or “empirical.” By methodological contribution, we mean papers that deal dominantly with statistical methods.

Table 1 Classification of the Papers in the Special Issue.

	Type of paper
Authors	Theoretical	Methodological	Empirical
Burchi and De Muro	×
Vizard and Speed	×		×
Burchi and Gnesi	×
Lavagnini and Mennella	×	×	×
Mazziotta and Pareto		×
Rippin		×	×
D'Emilione et al.	×	×	×

The paper by Francesco Burchi and Pasquale De Muro—titled “Measuring Human Development in a High-income Country: A Conceptual Framework for Well-being Indicators”—addresses some of the key challenging points in human development and well-being measurement, with special emphasis on high-income countries. It deals with two fundamental phases of the measurement exercise: (i) the clarification of the theoretical framework and (ii) the selection of the relevant categories of indicators. In order to accomplish the first task, the authors discuss the theoretical features of the capability approach and the empirical issues related to its operationalization in terms of measurement. They examine the differences among concepts, often confused, such as well-being, standard of living, human development, capabilities, and functionings. As for the second point, the paper reviews the scattered socioeconomic literature—which also includes policy evaluations handbooks—that makes an explicit distinction between input, output, outcome, and impact indicators. Only having in mind this distinction it is possible to identify indicators that more correctly measure—or can operate as proxies for—functionings. In the following section, the authors combine these two literatures and discuss the indicators that, from a theoretical point of view, seem more suitable for measuring functionings in some relevant dimensions of human development. Some examples of sound indicators for OECD countries are provided.

The paper of Polly Vizard and Liz Speed, “Examining Multidimensional Inequality and Deprivation in Britain Using the Capability Approach,” among other things, deals with the other fundamental step in the measurement of multidimensional well-being and poverty, i.e., the selection of dimensions. It illustrates a practical operationalization of the capability approach for monitoring equality and human rights in Britain, using the Equality Measurement Framework. The authors discuss the consultation process that has led to the identification of relevant dimensions and indicators, and present the latest empirical findings. The paper highlights patterns of inequality and deprivation in a number of critical domains, including life, physical security, standard of living, participation, individual life and identity, expression, and self-respect.

In another theoretical paper—“A Review of the Literature on Well-being in Italy: A Human Development Perspective”—Francesco Burchi and Chiara Gnesi offer a comprehensive overview of the empirical literature on quality of life, well-being, and human development in Italy. The paper first contextualizes the country-wise debate within the broader debate at the international level, highlighting the main streams of thought that have addressed critiques to GDP as an adequate indicator of people's well-being. Then, it concentrates on the proliferating literature emerged in Italy in the last two decades. The aim of the paper was to analyze critically the most influential indicators of well-being and quality of life in order to see what is the, explicit or implicit, theoretical foundation of these works, and whether this is coherent with the human development paradigm and capability/approach endorsed by the authors. These are their main findings: (i) many indicators seem to be the outcome of a strictly empirical approach, where no reflection on the relevant dimensions and on the indicators is made; (ii) many proposals are rooted in monetary, basic needs or happiness approaches; (iii) also those indicators that are specifically defined human development indices are based on a narrow view of human development as expansion of very basic capabilities, which is not suitable for high-income countries like Italy; (iv) researchers do not exploit adequately the increasing statistical information available in the national statistical offices. Therefore, there is an urgent need to elaborate context-based human development indices for Italy, which can improve our understanding of the territorial differences and assist the work of policy-makers.

A crucial well-being dimension or basic functioning is “holding a decent job.”3 In the case of advanced countries, where only a small part of the population works in the informal sector and employment data are available, it is feasible to analyze and measure decent job in a country. This is the purpose of the paper “Decent Work in Italy: The Basic-Relations-Fairness Proposal” written by Martina Lavagnini and Antonella Mennella. Linking the studies of the International Labour Organization with the capability approach, the authors develop a method to measure and analyze decent work. These two views are complementary because they have the commonality of recognizing “work” as something that goes far beyond a simple source of income. The methodology is built on the identification of a series of “working defects,” considered as distances between the actual and the desired labor condition. These working defects are grouped in three “profiles”: basic, relations, and fairness. The authors compare Italy with other European countries as well as Italian regions based on a large set of indicators. Finally, they make a first attempt to construct a composite index of decent work, which may be incorporated in a composite human development indicator.

When we employ a multidimensional approach to well-being, such as the capability approach, we need to deal with a series of statistical problems. In the article “Methods for Constructing Non-compensatory Composite Indices: A Comparative Study,” Matteo Mazziotta and Adriano Pareto discuss alternative methodologies to aggregate indicators into one single-composite index. The focus of their work is on two important properties that these indices should satisfy: (i) imperfect substitutability among dimensions; (ii) dynamicity, i.e., the possibility to use them to make comparisons across time. They discuss the method they have recently elaborated the Mazziotta–Pareto Index and compare it with the Weighted Product method.

Nicole Rippin's paper on “Multidimensional Poverty in Germany: A Capability Approach” offers a unique empirical analysis that compares levels and trends in income poverty, subjective poverty, and multidimensional poverty in Germany. In particular, the author constructs a new indicator of poverty, the Correlation Sensitive Poverty Index, which accounts for inequality between different dimensions. The results show that the identification of “who” are the most deprived and where they live changes significantly depending on which of the three poverty measures we adopt. The paper concludes that a multidimensional indicator of poverty, rooted in the capability approach, can offer richer information to policy-makers with regard to the targeting and areas of intervention.

The last paper, titled “Deprivations in the Capabilities Space: The Results of the Application of the Multidimensional Analysis of Capabilities Deprivation (MACaD) Model in the 13th Borough of Rome,” is an innovative study on well-being analysis and measurement at small territorial scale. The authors—Matteo D'Emilione, Luca Fabrizi, Giovanna Giuliano, Paolo Raciti, Simona Tenaglia, and Paloma Vera Vivaldi—collected primary data from a Borough of the city of Rome using a capability-oriented questionnaire. The paper provides several insights on how to try to estimate capabilities—going beyond functionings—, how to build composite indices of multidimensional deprivations, and how to make them of direct use for policy-makers. Another important point is that the data collection was implemented with the local social services providers, which are going to target beneficiaries and tailor their policies on the basis of the results of this work.

Additional information

Funding

This paper is an outcome of the National Research Project (PRIN) “Measuring Human Development and Capabilities in Italy: methodological and empirical issues” co-funded by the Italian Ministry of Education, University and Research (MIUR).

Notes

¹ See: http://ec.europa.eu/environment/beyond_gdp/index_en.html

² More information is provided in the official webpage: http://www.equalityhumanrights.com/ (consulted: 20 August 2013).

³ Using the Constitution as basis to derive a legitimate set of well-being dimensions, Burchi et al. (2014) found “decent job” to be the most important dimension in Italy.