The Open University ’ s repository of research publications and other research outputs The development of capability indicators

The paper is motivated by sustained interest in the capabilities approach to welfare economics combined with the paucity of economic statistics that measure capabilities at the individual level. Specifically, it takes a much discussed account of the normatively desirable capabilities constitutive of a good life, argued to be comprehensive at a high level of abstraction, and uses it to operationalize the capabilities approach by developing a survey instrument which is then used to elicit information about capabilities at the individual level. The paper explores the extent to which these capabilities are covariates of life satisfaction measure (utility) and investigates aspects of robustness and sub-group differences using standard socio-demographic variables as well as a relatively novel control for personality. In substantial terms, we find that there is some evidence of quantitative, but no qualitative, gender and age differences in the capabilities-life satisfaction relationship. Furthermore, we find that indicators from a wide range of life domains are linked to life satisfaction, a finding that supports the multi-dimensional approaches to poverty and quality of life and the view that people do not just value income (opulence in Sen’s language) per se. Our most important contribution, however, is primarily methodological and derives from the demonstration that within the conventions of household and social surveys, human capabilities can be measured with the aid of suitably designed statistical indicators.