Selecting a List: The Capability Approach's Achilles Heel

Abstract

In many applications of the capability approach it is necessary to rank individuals with respect to their well-being. This raises the difficult question of how to select the weights to be attached to the relevant functionings or capabilities that constitute well-being. In this chapter, we explore the possibility of using individual valuations to set these weights and we propose to use equivalent income as a specific well-being measure that is consistent with these individual valuations. We discuss its implementation and compare the results to four alternative well-being measures based on Colombian data for 2008: income, subjective well-being, the official SISBEN index, and the Colombian Multidimensional Poverty Index (CMPI). To do that, we estimate the valuations of the individuals using a life satisfaction equation. We find that there is remarkably little overlap between the alternative measures when used to identify the worst-off. The different well-being measures identify different individuals as worst-off. The equivalent income measure identifies individuals with a lower income, who are in worse health, live in a house of lower value and have a larger chance of being unemployed. This finding highlights the empirical relevance of the selection of the well-being measure when implementing the capability approach.