The Capability Approach to Poverty

When we say someone is poor, what does that mean exactly?  The definition of poverty and how to best address it have been the subject of much debate over the years.  Nobel Prize-winning economist Amartya Sen has proposed a radical change in how we view poverty.  Instead of solely addressing monetary measures, his approach, dubbed " the capability approach" (CA) to development views development as an enhancement of human capabilities, not the maximization of utility or monetary income.  This approach instead focuses on indicators for well-being that measure the ability to live what Amartya Sen—this approach’s pioneer—calls a “valued life.”  Accordingly, CA proponents argue that poverty should be defined as a “failure to achieve certain minimal or basic capabilities, where ‘basic capabilities’ are the ‘ability to satisfy certain crucially important functionings up to certain minimally adequate levels’” (Laderchi et al. 253).

CA thus radically changes the measures for human development and poverty in comparison to other development approaches, some of which are based on measuring people’s welfare via their utility and assuming that people will act to maximize this utility.  CA advocates argue that utilitarianism is an inadequate measure of well-being, as a person could theoretically be satisfied with what Sen calls “physical condition neglect,” while these individuals’ desires are constrained by what they view as possible outcomes.  These choices are further influenced by the cultural context the individual experiences, which significantly influences expectations (253).  Thus, the implications of CA for measuring human development and poverty indicate a move away from focusing on monetary income as the end measure in well-being; instead of monetary income serving as a sufficient condition for well-being (one in which achieving a certain level of income necessarily causes an individual to rise out of poverty), monetary income will be an adequate condition, or one condition among other externalities needed to improve welfare (254). 

CA thus changes the focus from an absolute one-size-fits-all approach for welfare measurement to a more nuanced approach that takes into account context and focuses on outcomes.  Poverty and welfare assessments under this approach will consider the fact that some people need a larger amount of resources to obtain the same achievements.  Therefore, the implications of CA are that poverty alleviation programs that use capability assessments as their basis for welfare measurement can be tailored to the context of the region, and accordingly target the individuals who need the most help in realizing their potential.  

Brazil's Bolsa Família I mentioned in my previous post is fruit of the capability approach.  It is less concerned with raising income beyond a certain arbitrary threshold and more concerned with allowing individuals to achieve their true potential by way of education, which, as a corollary will almost necessarily increase an individual's earnings, lifting him/her out of poverty.

Source:

Laderchi, Caterina Ruggeri, Ruhi Saith, and Frances Stewart. "Does It Matter That We Do Not Agree on the Definition of Poverty? A Comparison of Four Approaches." Oxford Development Studies 31.3 (2003): 243-74.