Making Sen's capacity approach functional

Amartya Sen has provided an important framework that helps define the basic needs that human should be able to get. His capabilities and functionings approach has been very helpful in establishing how to measure human rights, and especially economic and social rights can be achieved. There is a large literature that helps to channel policy given current rights achievements.

Martin Binder and Alex Coad point out that all elements in Sen's approach (the capabilities) could in fact be endogenous to each other, in other words, one component could be a precondition to the other. For example, some functioning could depend on particular resources, or the reverse, or some functionings could be resources for others. one's health may depend on income, but income may also depend on health. This is rather important when one should decide what policy one should concentrate on. But it is not obvious how to establish such a hierarchy. To do this, they apply a panel vector autoregression to the British Household Survey Panel. Thus allows to extract the relevant leads and lags.

Clearly, income is a resources for many functionings, but "being happy" is also a resource for income, especially for males, and for other functionings like "being healthy," "being nourished" and "moving about freely." Mobility is also a resource for higher material well-being. Thus, ensuring people a happy can help ensuring other dimensions of welfare are more easily achieved.