The Meaning of Development: Amartya Sen's "Capability" Approach

This section discusses Sen's influential perspective on the meaning of development.

Historical context:

- The idea that income and wealth are not ends in themselves dates back to Aristotle.

- Sen, a Nobel laureate, argues that "capability to function" is what matters for determining poverty
status.

Core concept:

- Sen argues that poverty can't be properly measured by income or conventional utility alone.

- What matters is what a person can do, not just what they have.

Functionings:

- Defined as what a person does or can do with the commodities they possess.

- Examples range from being well-nourished to participating in community life.

Five sources of disparity between income and actual advantages:

a) Personal heterogeneities (e.g., disability, illness, age, gender)

b) Environmental diversities (e.g., climate, pollution)

c) Variations in social climate (e.g., crime, social capital)

d) Distribution within the family (e.g., gender disparities in resource allocation)

e) Differences in relational perspectives (e.g., social conventions affecting what's considered necessary)

Contextual nature of well-being:

- Sen emphasizes that the same commodities can have different values in different contexts.

- Example: bread's nutritional value depends on personal factors like activity level, metabolism, weight,
whether women is pregnant or lactating etc.

Capabilities:

- Defined as the freedom a person has to choose between different functionings.

 - Influenced by personal features and command over commodities.

Implications for development economics:

Health and education are emphasized in development. Real income is essential, but to convert the
characteristics of commodities into functionings, in most important cases, surely requires health and
education as well as income.

- Some countries with high income but poor health/education are described as experiencing "growth
without development."

Well-being definition:

For Sen, human "well-being" means being well, in the basic sense of being healthy, well-nourished, well-
clothed, literate, and long-lived, and, more broadly, being able to take part in the life of the community,
being mobile, being physically secure, and having freedom of choice in what one can become and can
do.

Relationship to other development thinkers:

- The section relates Sen's ideas to other development concepts, such as Dudley Seers' focus on
poverty, unemployment, and inequality. If all three of these have declined from high levels, then beyond
doubt this has been a period of development for the country concerned.

- It also mentions Denis Goulet's emphasis on development as a means of gaining esteem.

In essence, Sen's capability approach provides a more comprehensive and nuanced understanding of
development, focusing on expanding human freedoms and abilities rather than just increasing income or
consumption. This approach has significantly influenced how development is conceptualized and
measured in recent decades.

Happiness and Development

This section discusses the relationship between economic development, income, and happiness. Here's a
detailed explanation of its content:

Happiness as part of well-being:

- Happiness is considered a component of human well-being.

- Greater happiness may expand an individual's capability to function.

 - Amartya Sen argues that a person may regard happiness as an important functioning for their well-
being.

Empirical relationship between income and happiness:

- Economists have explored the relationship between happiness and factors like income.

- There's wide variation in this relationship, especially across developing countries.

Cross-country comparison:

- On average, happiness or satisfaction increases with a country's average income.

- Earlier research showed that roughly four times the percentage of people report being unhappy or
unsatisfied in poorer countries (e.g., Tanzania, Bangladesh, India, Azerbaijan) compared to richer ones
(e.g., United States, Sweden).

Figure:

- Figure 1.1 illustrates the relationship between income per capita and happiness using 2018 data.

Key findings from the graph:

- Average happiness is greater with higher average income.

- The relationship is increasing at a decreasing rate (diminishing returns).

- After a certain income level (about $40,000 in this data), happiness doesn't increase significantly with
higher income.

Factors affecting happiness:

- Financial security is only one factor affecting happiness.

- Richard Layard identifies seven factors that affect average national happiness:

family relationships, financial situation, work, community and friends, health, personal freedom, and
personal values.

- People are happier when they are not unemployed, not divorced/separated, have high trust in
society, enjoy high government quality with democratic freedoms, and have religious faith.

Variation among developing countries:

 - The percentage of unhappy/unsatisfied people varies widely among developing countries with similar
incomes.

- Examples: Zimbabwe vs. Indonesia, Turkey vs. Colombia.

Alternative approaches to measuring development:

- Mentions Bhutan's attempt to use "gross national happiness" instead of gross national income as a
measure of development progress.

- Bhutan's indicators extend beyond traditional notions of happiness to include capabilities such as
health, education, and freedom.

This section emphasizes the complex relationship between economic development and happiness,
highlighting that while income is important, especially for developing countries, it's not the only factor
contributing to well-being and should be considered alongside other social and personal factors in
understanding development.