existence of public goods – roads and ports.
Furthermore, even insofar as purchasable commodities do establish a person’s capabilities, for different people different amounts (and types) of commodities are needed to establish the same capabilities. The most obvious example, given emphasis by Sen, is the difference between a person who has a significant physical handicap and a person who does not have such a handicap. The former – a person who is unable to walk, for example – will require more and different commodities to obtain the travel capability. Similarly, the capability to meet one’s nutritional needs requires more commodities for a very large person than for a very small person. So the same amount of money will not provide the same degree of well-being for these two people.
Sen’s capabilities approach to well-being and poverty has had a very large and positive impact, placing the measurement, analysis, and policy relating to material well-being on a more complete and realistic foundation. It has affected, in particular, the formation of the UN’s Human Development Index and the Millennium Development Goals – both of which I will discuss shortly. There is, however, a basis for confusion in Sen’s approach. On the one hand, he has developed the concept with reference to the capabilities of individuals – as the point about people with physical handicaps illustrates. On the other had, the concept has been widely employed with regard to whole societies. Unless we believe that two societies intrinsically have, for example, very different sized people or very different proportions of physically handicapped people, similar national incomes (or wealth) in these two societies should lead to similar capabilities – a least with regard to these capabilities that can be met through the market. Even with capabilities that require large non-market components – health and education – the overall capabilities of the two societies to assure the individual capabilities of their people should have close relationships to the amounts of income (or wealth) in the two societies. If two societies with the same level of income (and wealth) are very different in terms of the individual capabilities, it is not because the two societies have different overall capabilities.7
It is now widely recognized that material well-being cannot be identified simply by income – whether we are looking at the income of an individual or a society. Nonetheless, a great deal of analysis and policy continues to be based on a one-dimensional focus on income, and economic development is largely seen in terms of economic growth (i.e., an increase in the level of income). When poverty is the focus of analysis, the measure is usually simply the level of income of the poor. The International Financial Institutions, most notably, continue largely along this one-dimensional route. Work that has emerged through the United Nations, however, has tended to be based on a more multi-dimensional understanding of material well-being.
7 This statement ignores the very different natural conditions – climate, for example – in which different societies exist. It might seem that in a country with a mild climate less income would be needed to provide the same level of nutrition and health (and general comfort) than in a society with a severe climate. For the points I want to develop, however, it will become evident that abstracting from this issue creates no problems. Furthermore, one could argue that natural conditions should properly be counted as part of the wealth of a society – however hard it would be to place a measurable value on this form of wealth.