Philosophical Issues in Economics

* The cases marked with a star are those that DO NOT seem intuitively satisfying.

CASE I – The starving man versus the fasting priest

By contrasting the cases of the starving man and the fasting priest Sen shows the advantage of focusing on capabilities instead of achieved functionings. Both would appear to have the same lack of achieved functioning to be well nourished. The capability approach however, directly shows the difference in capabilities between the two, where the priest has the capability to be well nourished whereas the starving person does not (Sen 1999:75).

However, since the other evaluative spaces in the table above focus on other achieved functionings, which influence ones’ ability to choose to be well nourished, the same difference can be deduced out of the fact that the priest is not lacking income, utility or access to food.
CASE II – The undernourished Indian wife
The case of the undernourished Indian wife illustrates one of the weaknesses of using income data, which generally relates to household income as a whole, as the evaluative space, since it does not account for unequal distribution within the household.
Sen demonstrates that marginal utility’s weakness as the evaluative space is due to its limited concern with the maximisation of the utility sum, which leads it to ignore inequalities in distribution (see Sen 1980:203 for an example). Sen points out that ‘total utility equality’ can overcome this problem by no longer focussing on the “additional utility that would be generated if the person had one more unit of income” but by concentrating on observed utility, aiming to increase the utility level of the worst-off person (Sen 1980:205-6). This type of utility is however also problematic. When comparing the cases of the Indian wife and the person with expensive tastes in food, according to total utility equality, the person with the lowest utility will be granted more resources. Total utility equality overlooks the fact that the Indian wife’s level of utility will not reflect her entrenched deprivation and apparent worse situation than the person with expensive tastes and low utility, since the Indian wife has adapted to her situation (Sen 1999:62-3). It thus, fails to account for adaptation and mental conditioning effects (Sen 1999:62).
Rawls’ theory of justice does not take the diversity of human beings fully into account (Sen 1980:215). As Rawls states, “I also suppose that everyone has physical needs and psychological capacities within the normal range, so that the problems of special health care and of how to treat the mentally defective do not arise […] hard cases can distract our moral perception by leading us to think of people distant from us whose fate arouses pity and anxiety”(Rawls 1975:96). Consequently Rawls’ theory considers the cases of, for example, physically or mentally handicapped people irrelevant. In the case of the Indian wife it is unclear whether Rawls’ conception of primary goods, particularly that of equal opportunity, would recognise the Indian wife’s personal constraint. One of the problems with applying Rawls’ theory to the same objective as Sen’s approach, to assess people’s substantive freedoms and committing to equality in this domain, may be, as Sugden explains, due to the fact that Rawls’ theory does not share this objective (Sugden 1993:1957).
Sen argues that Rawls’ theory of justice by overlooking these “hard cases” does more injustice than justice (Sen 1980:215-16). Hence one of the main focuses of the capability approach is the diversity of human beings and the differences between people’s ability to convert the same commodities into achieved functionings (Sen 1999:69-70). In the case of the Indian wife, her gender acts as a limiting factor in her ability to convert the inadequate household income to her advantage. If the Indian wife would have access to adequate means to nourish herself, she most likely would. But in her current situation she chooses, influenced by her social and cultural environment, to feed her husband before herself.

The Indian’s wife entrenched deprivation can be deduced from the HDI, but it does not directly include the reason for her deprivation in comparison to her husbands.

CASE III – The person with expensive tastes
Sen uses Rawls’ theory to illustrate its superiority over that of utility in the case of someone with expensive tastes and thus a lower utility with a normal amount of resources (for Rawls’ response refer back to the table) (Sen 1999:72). The capability approach is however much more ambiguous in this particular case.

Robeyns makes the case for a businessman who ‘needs’ an expensive car to gain respect from his peers and/or to appear in public without shame (Robeyns, 2003:22). A similar case can be made for the person with expensive tastes in food. If the person with expensive tastes in food would be a chef, for example, would he ‘need’ more expensive food to gain respect from his peers? As Sen’s capability approach is not a theory and only sets out a framework, in the case of someone with expensive tastes in food it depends on which functionings are chosen as the focus for evaluation (Robeyns 2003:8). If the focus is on the functioning to be well nourished, expensive tastes would be irrelevant since a lesser amount of resources would amount to the same capability. If the functioning of focus would be to gain respect from peers, expensive tastes in food might influence an individual’s capabilities. This supports the argument that if the purpose of evaluation is poverty analysis there is a need to make a clear distinction between basic capabilities and other capabilities. Basic capabilities are the capabilities individuals need to fulfil their basic needs, thus including relatively agreed upon functionings. Other capabilities are more open to debate and would need to be selected in direct context to whatever one is aiming to evaluate.

It follows from the comparison between the different approaches based on their varying informational bases that in terms of poverty analysis the HDI is capable of reflecting individual deprivation on the basis of its indicators focussing on health, education and income. The HDI’s simplicity makes it easier to operationalise than the capability approach and to make large comparisons, between countries or regions. However, for policy interventions, the situation needs to be understood in more detail; the reason why the Indian wife is relatively less well off than her husband becomes essential. The capability approach due to its non-exclusive informational base, taking the social and cultural environment and individual conditions into account, thus provides an appropriate, all-inclusive framework to base policy decisions on. Due to the fact that its informational base - the capabilities - are not fixed and must be decided on a case basis, the capability approach’s disadvantage, with regard to the case of the person with expensive tastes, can be overcome. Hence, the advantage of the capability approach’s flexibility outweighs its main disadvantage in a policy-making environment.