Beyond GNP and Current HDI: An Overview of The Capabilities Measurement Project

1. Beyond GNP and Current HDI: An Overview of The Capabilities Measurement Project Oxford University Workshop on Measurement of Freedom May 2008 Open University and University of Pavia Workshop on Capabilities and Health, Pavia 2008 Paul Anand Economics, The Open University and HERC, Oxford University

2. AHRB Funded Work Key collaborators: • Ian Carter, Universita di Pavia • Keith Dowding, London School of Economics • Francesco Guala, Exeter University • Martin van Hees, Groningen Universiteit • Graham Hunter, The Open University with help from Maria Sigala (Oxford), Ingrid Robeyns (Leiden), Ron Smith (Birkbeck) and Cristina Santos (UCL/Open) and Amartya Sen!

3. Some publications Economica Health Economics Journal of Health Economics Social Science and Medicine Social Indicators Research Journal of Medical Ethics Journal of Human Development (forthcoming) Chapter in Festschrift for Amartya Sen Arguments for a Better World, OUP, Basu and Kanbur, (forthcoming)

4. Motivation • Problems with Expected Utility Theory • Challenges to National Income Measurement (work in UK and OECD) • Operationalising capabilities approach in high income countries

6. Limits to Gross National Product per capita • Ignores defensive expenditures • Ignores value of household work • Ignores differences in needs • Emphasises material affluence (eg ignores qol at work, rights violations) Measures monetary value of production or cost of consumption but measurement of human welfare could be improved GDP Satellite Accounts, Social Accounting Matrices (non-monetary indicators as complements) HDI More dimensions, breakdowns

7. Limits to Gross National Product

8. Phase I (2000-2006) primary and secondary data devise methodology for capability assessment conduct national UK survey using OCAP explore some econometric issues associated with use of capability data Phase II (2006- extending applications of capabilities measurement (OCAP family) short form version (Glasgow) Spanish translation (Buenos Aires) further applications (e.g. mental health in Oxford, housing in social policy) analysis Capabilities Measurement Project (Summary to Date)

9. Some Early Work • Human Development Index • Schokkaert and van Ootegem (1990) • Enrica Chiappero Martinetti (1994, 2000) • Laderchi (1997) • Kuklys (2005) • Brandolini and D’Alessio (1999) “The purpose is to assess the operational content of the approach ie the empirical methods to measure functionings and capabilities…much of what one can do depends the available data….we discussed the practical difficulties of moving to capabilities and proposed to remain in the (refined) functionings space.” Source: Plenary paper given to the International Economics Association Congress, Buenos Aires

10. Theory (Sen 1985 pp11-4) ui = hi(.) ui is ‘happiness enjoyed’ hi (fi(c(xi))) xi is vector of commodities possessed by i c(.) converts commodity vector into vector of characteristics fi(.) reflects one pattern of use  Fi “Qi represents the freedom a person has in terms of the choice of functionings, given his personal features Fi…and his command over commodities Xi.”

11. Theory (Sen 1985 pp11-4) ui = hi(.) ui is ‘happiness enjoyed’ hi (fi(c(xi))) xi is vector of commodities possessed by i c(.) converts commodity vector into vector of characteristics fi(.) reflects one pattern of use  Fi “Qi represents the freedom a person has in terms of the choice of functionings, given his personal features Fi…and his command over commodities Xi.” Our approach 1. Elicit indicators of Qi, Ci,j where j = 1…60+ 2. Estimate lsi = hs(Ci,j) where s in hs is null or allows only partial heterogeneity

12. A. Anand and van Hees (2006) Question Types Achievements and Scope Perceived distribution of scope Domains Happiness Success Health Intellectual Stimulation Social Relations Environments Personal Integrity Overall Options Models Overall Options Satisfaction Individual Achievements

13. Questions • Generally, my life is happy (strongly agree...) • I feel the scope to seek happiness in my life is (very good…) c. The proportion of the population who have severely limited opportunities to seek happiness is (0-9%,…) a. I have satisfying social relations (strongly agree…) b. I feel the scope to form satisfying social relations in my life is (very good…) c. The proportion of the population who have severely limited opportunities to form satisfying social relations is (0-9%) a. I live a health life for my age (strongly agree…) b. I feel the scope to live a healthy life for my age is (very good…) c. The proportion of the population who have severely limited opportunities to live healthy lives for their age is (0-9%)

14. Some Conclusions Each achievement is a function of its respective capability Estimates of other capabilities are often anchored on own capabilities with notable exceptions Greatest scope: health/environment Least scope: social relations/personal integrity Issues to be Addressed • Sample Size • Secondary Data • Question Type

15. B. Anand Hunter and Smith (2005) Social Indicators Research Aim Explore links between satisfaction and capabilities using BHPS data

16. Econometric Approach s = a + bC + e s = a + bC + cP + e pjhat = sj-sjhat j=10 life domains s = a + bC + cPhat + e Hausman Wu Test for endogeneity: c=0

17. Adaptation Issues If Complete and Instantaneous ‘Goods’ would have no observable impact on life satisfaction There is some evidence of adaptation especially to improvements so capabilities which impact life satisfaction are only the utilitarian capabilities

18. Two Conclusions Person specific effects significant Secondary data exists but is sparse

19. AHRB Project to Measure Capabilities Research Question Can we measure capabilities across a wide spectrum of human domains within the conventions applicable to national household and social surveys?

20. Framework for Questions Nussbaum’s List Comprehensive Robust (similar to others) Don’t require universal claims Has normative grounding

21. Question Categories • Life • Bodily Health • Bodily Integrity • Senses Imagination and Thought • Emotions • Practical Reason • Affiliation • Nature • Leisure • Control over one’s Environment

22. Bodily Health • Being able to have good health, including reproductive health; to be adequately nourished; to have adequate shelter

23. 2 Bodily Health Being able to have good health, BHEALTH (Q57) Does your health in any way limit your daily activities compared to most people of your age? Yes, No. BHPS including reproductive health; BREPRODUCT (Q61) Are you able to have children? Yes, No, Don't know, Prefer not to answer If No Please indicate the reason(s) you are not able to have children. I cannot have children because of: Q62_1 My age; Q62_2 I have had a vasectomy / hysterectomy; Q62-3 Another medical condition; Q62_4 My partner being unable / unwilling; Q62_5 Another reason; Q62_6 Prefer not to answer. to be adequately nourished BNOURISH (Q59) Do you eat fresh meat, chicken or fish at least twice a week? Yes/No BHPS If No Q60 For which of the following reasons, if any, do you NOT eat fresh meat, chicken or fish at least twice a week? [Please tick all that apply] I am vegetarian/vegan, I cannot afford to, I do not like eating fresh meat, chicken or fish that often, I do not have time to prepare fresh food., Some other reason to have adequate shelter. BSHELTER (Q85) Is your current accommodation adequate or inadequate for your current needs? More than adequate, Adequate, Inadequate, Very inadequate BCANMOVE (Q86) Are you prevented from moving home for any reason? Yes, No If yes Q87 What prevents you from moving home? Lack of money/finances; The Council would be unlikely to re-house me; Family responsibilities and/or schooling; I could not move out of my current accommodation because of some other reason

24. HEALTH STATUS Does your health in any way limit your daily activities compared to most people of your age? Yes, No. BHPS

25. REPRODUCTION Are you able to have children? NEW Yes, No, Don't know, Prefer not to answer If no please indicate the reason(s) you are not able to have children I cannot have children because of: Q62_1 My age Q62_2 I have had a vasectomy / hysterectomy Q62_3 Another medical condition Q62_4 My partner being unable / unwilling Q62_5 Another reason Q62_6 Prefer not to answer

26. NOURISHMENT Do you eat fresh meat, chicken or fish at least twice a week? Yes/No BHPS with additions If No (Q60) For which of the following reasons, if any, do you NOT eat fresh meat, chicken or fish at least twice a week? [Please tick all that apply] I am vegetarian/vegan I cannot afford to I do not like eating fresh meat, chicken or fish that often I do not have time to prepare fresh food Some other reason

27. ADEQUATE SHELTER BSHELTER (Q85) Is your current accommodation adequate or inadequate for your current needs? More than adequate, Adequate, Inadequate, Very inadequate BCANMOVE (Q86) Are you prevented from moving home for any reason? Yes, No If yes (Q87) What prevents you from moving home? Lack of money/finances; The Council would be unlikely to re-house me; Family responsibilities and/or schooling; I could not move out of my current accommodation because of some other reason

28. 4 Types of Capability Indicators Type 1. Opportunities Type 2. Abilities Type 3. Constraints Type 4. Functionings + Reasons/ Universality

29. Analyses • Sex/age differences + links to happiness for all Capabilities • Violent crime, gender inequalities, links to income, personality and life satisfaction • Health as a determinant of capability

32. Gender Differences

33. Violent Crime, Gender Inequalities and Life Satisfaction Data • Past Experience/Future Expectations of domestic, sexual and other forms of assault • Safety in local area during day and night Analysis • Describe experience and differences between sexes • Correlations between all indicators • Examine causes of perceived future risk • Links between violence and life satisfaction • Particular link between domestic violence and income poverty

34. Health and Capability Poverty Data • Does health limit your daily activities for your age • All capabilities, life satisfaction and socio-economic covariates Analysis • Capability differences by health status • Capabilities as a function of health, income and personality (binary and ordered logit) • Capability profiles as a function of health income and personality (latent class)

39. Obesity and Opportunity Set Dynamics:From Rational Choice to a New Kind of Market Failure? • Technological Change • ‘Optimal Fattening’ • Social Norms • Obesogenic Environments as Capabilities we value negatively Competition Inappropriate Choice Sets Decision utilities ≠ experienced utilities or best interest utilities

40. Obesity and Opportunity Set Dynamics:From Rational Choice to Market Failure Initial Condition: S={a,b}, D/S={a}, aPb for all b Competition and new feasible set: S’={a,b1,b2}, D/S’={b1} (for axiomatics see Suzumura and Xu forthcoming) Result: Decision Utility ≠ Best Interest/Experienced Utility (Kahneman et al QJE 1997) Conclusion: Inappropriate Choice Sets can result from free individual choices + competitive markets (New Kind of Market Failure – applies also to debt)

41. Capabilities Measurement – Some Findings to Date It IS possible to measure capabilities… Some secondary data exists but more can be generated (our work identifies steps) Sen’s 3 key equations can be estimated Experienced utility (welfare) is highly multi-dimensional Capability Inequalities and heterogeneity (eg personality) can be found Health is strongly related to capability deprivation

42. Finally… Future plans: discrimination expand questions in leisure/nature/work expand sub-population coverage to make more detailed use of response categories (disability/reproductive choice/children) extend applications beyond England, Scotland and Argentina In health; extend EQ5 do work on access to care complete analysis of child development