The Measurement of Capabilities

1
The Measurement of Capabilities
4th University of Verona Winter School Canazei,
2009

• Paul Anand
• Economics, The Open University and
• Health Economics Research Centre, Oxford
  University

2
Overview Data for Capabilities Measurement

• I. Motivation (Utility and Social Choice)
• II. Capabilities Approach to Welfare Economics
  Context, Theory and Operationalisation Issues
• III. The Capabilities Measurement Project
• phase 1 pilot BHPS
• phase 2 ocap (UK, Argentina, Scotland)
• phase 3 child development, oxcap19
• IV. Exercise

3
Capabilities Measurement Project Some
Collaborators and Advisors

• Philosophy and Social Science
• Ian Carter
• Keith Dowding
• Francesco Guala
• Martin van Hees
• Graciela Tonen
• Maria Sigala

• Economics
• Ron Smith
• Graham Hunter
• Jaya Krishnakumar
• Peter Moffat
• Cristina Santos
• Amartya Sen

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Some publications

• Journal of Human Development (2009)
• Chapter in Festschrift for Amartya Sen Arguments
  for a Better World, Oxford University Press, Basu
  and Kanbur, (2008)

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Some publications

• Journal of Human Development (2009)
• Chapter in Festschrift for Amartya Sen Arguments
  for a Better World, Oxford University Press, Basu
  and Kanbur, (2008)
• Social Indicators Research, Journal of Health
  Economics, Journal of Medical Ethics, Health
  Economics etc

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I. Motivation from Utility Theory

• The case
• rational agents can violate all the axioms of EU
• therefore there is room for empirical
  explorations of preference in welfare economics

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Classical Decision Theory
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Modern Decision Theory
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Von Neumann and Morgernsterns Axiomatisation of
Transitive Utility
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Fishburns Axiomatisation of Intransitive Utility
Theory (1988 p80)
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The Logical Consistency Argument

• The proof of intransitivity is a simple example
  of reductio ad absurdum. If the individual is
  alleged to prefer A to B, B to C, and C to A, we
  can enquire which he would prefer from the
  collection of A, B and C. Ex-hypothesi, he must
  prefer one, say he prefers A to B or C. This
  however contradicts the statement that he prefers
  C to A, and hence the alleged intransitivity must
  be false.
• Tullock (Oxford Economic Papers 1964 p403)

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A problem with Tullocks Argument Validity

• Tullock assumes expansion consistency is this
  normatively essential?
• Health care and freedom of information example
• Faccess to all records, access to no records
• Preference ranking no accessgtaccess to all

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A problem with Tullocks Argument Validity

• Tullock assumes expansion consistency is this
  normatively essential?
• Health care and freedom of information example
• Faccess to all records, access to no records
• Preference ranking no accessgtaccess to all
• Faccess to all records, access to electronic
  records, access to no records
• Preference ranking access to allgtaccess to
  electronicgtno access
• Conclusion Tullockss argument is question
  begging as it relies on the normative appeal of
  expansion consistency

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Semantic embeddedness - The Constitutional
Argument

• The theoryis so powerful and simple, and so
  constitutive of concepts assumed by further
  satisfactory theory that we must strain to fit
  our findings or interpretations, to fit the
  theory. If length is not transitive, what does it
  mean to use a number to measure length at all? We
  could find or invent an answer, but unless or
  until we do, we must strive to interpret longer
  than so that it comes out transitive. Similarly
  for preferred to.
• Davidson Action and Events (1980 p237)

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Money Pump Arguments

• Asynchronous Consistency Interpretation
• Pab, Pbc, Pca means
• F1a,b ?? swap b for a and pay e
• F2b,c ?? swap c for b and pay e
• F3a,c ?? swap a for c and pay e
• Then one F prevails and this defines C
• No room for inconsistency to violate dominance

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Money Pump Arguments

• Chaining Interpretation
• Pab, Pbc and Pca mean
• If F1a,b then swap b for a and pay e
• if F2b,c then swap c for b and pay e
• if F3a,c then swap a for c and pay e
• And then c F2 F1 and F3 ? C2 C1 and C3 c e
  e e
• FishburnLavalle/Anand/Sugden objection if F2, F1
  and F3 is the choice sequence then preferences
  for components may not be relevant or helpful
• But why would anyone think that?

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Money Pump Arguments

• One reason ifthen and the structure of material
  implication
• A? x, B? y and C? z implies
• A and B and C ? x and y and z
• However, counterfactuals dont have this
  structure in general

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Money Pump Arguments

• The conference goers nightmare example
• A1lose cash ?? have a beer
• A2lose travellers cheques ?? have a beer
• A3lose credit cards ?? have a gin and tonic

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Money Pump Arguments

• The conference goers nightmare example
• A1lose cash ?? have a beer
• A2lose travellers cheques ?? have a beer
• A3lose credit cards ?? have a gin and tonic
• A1 A2 and A3 does not imply have 2 beers and a
  gin and a tonic
• Counterfactuals dont have a chaining structure
  in general

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When context can matter (I)

• Possible world 1 small apple, orange

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When context can matter (I)

• Possible world 2 orange, large apple

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When context can matter (I)

• Possible world 3 small apple, large apple

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When context can matter (I)

• Possible world 1 small apple, orange
• Possible world 2 orange, large apple
• Possible world 3 small apple, large apple
• Possible responses

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When context can matter (I)

• Possible world 1 small apple, orange
• Possible world 2 orange, large apple
• Possible world 3 small apple, large apple
• Possible responses
• Large apple size, transitivity
• Small apple politeness

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A game where context can matter (Blythe 1972 and
Packard 1982)

• Scores on Face
• Die a 1 1 4 4 4 4
• Die ß 3 3 3 3 3 3
• Die ? 5 5 2 2 2 2
• Rules
• Umpire selects two die
• Each player throws once
• Highest number wins

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But cant we redescribe the choice problem?

• Translation Possibility Theorem
• All intransitive behaviour can be given a
  description where transitivity is not violated.
  Conversely, all transitive behaviour can be given
  an intransitive description.

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Translation

• i. Cab, Cbc and Cca

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Translation

• i. Cab, Cbc and Cca
• ii. Refine primitive description
• l a out of a and b
• m b out a and b
• n b out and b and c
• o c out of b and c
• p a out of a and c
• q c out a and c

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Translation

• i. Cab, Cbc and Cca
• ii. Refine primitive description
• l a out of a and b
• m b out a and b
• n b out and b and c
• o c out of b and c
• p a out of a and c
• q c out a and c
• iii. i can then be rewritten Clm, Cno, Cqp

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Translation

• i. Cab, Cbc and Cac

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Translation

• i. Cab, Cbc and Cac
• ii. Refine primitive description and map onto new
  language as follows
• l a out of a and b
• m b out a and b
• m b out and b and c
• n c out of b and c
• n a out of a and c
• l c out a and c

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Translation

• i. Cab, Cbc and Cac
• ii. Refine primitive description and map onto new
  language as follows
• l a out of a and b
• m b out a and b
• m b out and b and c
• n c out of b and c
• n a out of a and c
• l c out a and c
• iii. i can then be rewritten Clm, Cmn, Cnl

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Consequence for Empirical Work on Welfare

• If rational agents can have intransitive
  preferences then preference is unlikely to have
  much apriori structure

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From Decision Theory to Social Choice
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II. The Capabilities Approach to Welfare
Economics, Context, Theory and Operationalisation
Issues

• The Social Choice and Philosophical Background
• Sens 3 variables and their equations
• United Nations HDI
• (only 3 dims and not distinct for rich
  countries)

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Modern Social Choice and Welfare Theory
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Theory (Sen 1985 pp11-4)

• Sens Three Equations
• EQ 1. fi fi(xi) - heterogeneity in conversion
• EQ 2. ui hi(fi) - happiness
• EQ 3. Qi f1,f2,fm/endowment - advantage
• xi is vector of commodities possessed by i
• f(.) converts resources into activities
  (doings/beings aka functionings)
• Qi represents the freedom a person has in terms
  of the choice of functionings, given his personal
  features Fiand his command over commodities xi.

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Limits to Gross National Product per capita

• Ignores defensive expenditures
• Ignores value of household work
• Ignores differences in needs (not so important if
  adequate equivalence scales exist)
• Emphasises material affluence (eg ignores qol at
  work, rights violations, how we spend our time
  (eg Kahneman et al 2004))
• Measures monetary value of production
• or cost of consumption but
• measurement of human welfare could be more
  complete
• This is a moving target
• GNP
• Satellite Accounts, Social Accounting Matrices
  (non-monetary indicators as complements)
• HDI
• More dimensions, breakdowns

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Some Early Empirical Capabilities Research

• Human Development Index
• Schokkaert and van Ootegem (1990)
• Enrica Chiappero Martinetti (1994, 2000)
• Laderchi (1997)
• Kuklys (2005)
• Andrea Brandolini (1999)
• The purpose is to assess the operational
  content of the approach ie the empirical methods
  to measure functionings and capabilitiesmuch 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

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Capabilities Measurement Project (Summary to Date)

• Phase I (2000-2006)
• Primary and secondary data
• Devise methodology for capability assessment
• Conduct national UK survey using
• OCAP - 2005 version
• Some ideas econometric issues associated with
  use of capability data
• Phase II (2007-2008)
• extending applications and analyses of
  capabilities measurement
• OCAP - Glasgow public health SHORT version
• OCAP - Argentina - Spanish translation
• Phase III (2009-
• OXCAP19 Oxford mental health and coercion
• Child Development and Old Age

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Capabilities Measurement and Assessment

• Our approach
• 1. Elicit indicators of Qi
• 2. Estimate ui hi(Qi)

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Capabilities as ScopeAnand 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

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Questions

• a. Generally, my life is happy (strongly
  agree...)
• b. 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)

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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

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B. Some secondary data?Anand Hunter and Smith
(2005) Social Indicators Research

• Aim
• Explore links between satisfaction and
  capabilities using BHPS data

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Econometric Approach

• s a bC e
• s a bC cP e
• pjhat sj-sjhat j10 life domains
• s a bC cPhat e
• Hausman Wu Test for endogeneity c0

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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

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Two Conclusions

• Person specific effects significant
• Secondary data exists but is sparse

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C. 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?

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The Measurement of Capabilities

• Developing the OCAP (2005) instrument
• Analysis by Sex and Age
• Violence and the Extension to Risk
• Latent Class and Multi-dimensional deprivation

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Framework for QuestionsThe OCAP 2005 instrument

• Nussbaums List
• Comprehensive
• Robust (similar to others)
• Dont require universal claims
• Has normative grounding

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Question Categories

• Life
• Bodily Health
• Bodily Integrity
• Senses Imagination and Thought
• Emotions
• Practical Reason
• Affiliation
• Nature
• Leisure
• Control over ones Environment

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Bodily Health

• Being able to have good health, including
  reproductive health to be adequately nourished
  to have adequate shelter

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• 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

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HEALTH STATUS

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

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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

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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

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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

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5 Types of Capability Indicators

• Type 1. Opportunities
• Type 2. Abilities
• Type 3. Constraints
• Type 4. Functionings Reasons
• Type 5. Functionings Universality

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Analyses

• Sex/age differences links to happiness for all
  Capabilities (Anand et al 2009)
• Vulnerability to Violent Crime, gender
  inequalities, links to income, personality and
  life satisfaction
• Health as a determinant of capability deprivation

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Gender Differences
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Violent Crime, Gender Inequalities and Life
Satisfaction (Anand and Santos 2007)

• Data
• Past Experience/Future vulnerability to domestic,
  sexual and other forms of assault
• Current experience of Safety in local area during
  day and night
• Emerging Themes
• 1. Violence in general has a negative impact on
  life satisfaction whether you use self report or
  local area reports
• 2. Self-reported vulnerability to future assault
  drives out past experience of violence in
  happiness equations
• 3. Some evidence that higher relative earning
  females are more at risk of domestic violence

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Health and Capability Poverty

• Data
• Does health limit your daily activities for your
  age
• All capabilities, life satisfaction and
  socio-economic covariates
• Analysis (latent class)
• Can we identify a super-poor group
• What are capability classes related to?

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Work in Progress and Concluding ThoughtsLimits
to Income as a Measure of Welfare
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with Krishnakumar et al

• GLLAMM (generalised linear and latent mixed
  models)
• ordinal response, unobserved heterogeneity,
  potential endogeneity
• Use FIML
• Results
• A ordered probit
• B ordered probit with instrumentation
• C gllamm
• D gllamm with lambdas set to zero
• sd of eta significant in C and D
• unobserved heterogeneity plays a larger role in
  fitting life satisfaction when it is shared by
  the capabilities

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Capabilities and health-care measurement a
thought

• Eq5d is a hybrid measure
• Affected by adaptation so gives biased estimates
  of health-gain from medical interventions
• More objective self-reports about normal
  activities might be helpful

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Capabilities and Welfare over the Lifespan- Very
Young Children

• Mother and Child module GSOEP
• Birth and 2years
• Data for all three equations
• f1f(parenting regime, household affluence,
  local environment)
• u2-u0g(f1f9)
• Ch(f1f9)

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Capabilities and Welfare over the Lifespan- Very
Young Children

• Data for all three equations
• Functionings
• Sing Singing childrens songs with or to the
  child
• Walk Talking walks outdoors
• Paint Painting or doing arts and crafts
• Read Reading or telling stories
• Look Looking at picture books
• Play Going to the playground
• Visit Visiting other families with children
• Shop Going shopping with the child
• Watch Watching television or videos with the
  child

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Capabilities and Welfare over the Lifespan- Very
Young Children

• Data for all three equations
• Capabilities
• Talking, Everyday Skills, Movement, Social Skills
• Talking
• t1 Understands brief instructions such as go
  get your shoes
• t2 Forms sentences with at least two words
• t3 Speaks in full sentences (with four or more
  words)
• t4 Listens attentively to a story for five
  minutes or longer
• t5 Passes on simple message such as dinner is
  ready
• Eskills
• e1 Uses a spoon to eat, without assistance and
  without dripping
• e2 Blows his/her nose without assistance
• e3 Uses the toilet to do number two
• e4 Puts on pants and underpants the right way
  around
• e5 Brushes his/her teeth without assistance
• f1f(parenting regime, household affluence,
  local environment)
• u2-u0g(f1f9)
• Ch(f1f9)

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Capabilities and Functions Simultaneous Equations
3SLS

• Capabilities (Development) Eq
• Functionings (Targeting) Eq

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Talking Capabilities and Singing
Activities (Being sung to functioning)

b Se P
Talking equation
Mother Singing 2.573947 1.139581 0.023903
Age 0.084253 0.014116 2.39E-09
_cons -1.06683 1.222908 0.383007
Mother Singing equation
Talk -0.03992 0.044706 0.371832
Nationality -0.16612 0.046607 0.000365
_cons 1.098385 0.186239 3.69E-09

Aic 1570.972
Bic 1595.837
N 466
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The Capabilities Measurement Project Emerging
Conclusions

• Methodological/Theoretical Themes
• It IS possible to measure capabilities
• Secondary data exists but more can be generated
• Sens 3 key formal equations can be estimated
• Suggests a link between welfare and the life
  course
• A Behavioural interpretation of links between
  capabilities and functionings is possible
• Substantive Themes
• Experienced utility (welfare) appears HIGHLY
  multi-dimensional
• There is evidence of a small group in UK with
  low all round capabilities
• Health is strongly related to capability
  deprivation
• Some forms of deprivation are not obviously
  adapted to eg vulnerability to domestic violence
  and discrimination at work

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Future work

• Future agenda
• 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
• expand econometric and economic theory applied
  to data
• replicate internationally

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Future work

• Future agenda
• 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
• expand econometric and economic theory applied
  to data
• replicate internationally
• THANK YOU!

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Exercise

• You are invited to develop a proposal for
  empirical research, informed by the capabilities
  approach. In groups, spend 10-15 mins developing
  a proposal. Please briefly summarise your
  proposal.
• The proposal can take any shape you want but
  should say
• What model(s) are being estimated
• What data is to be used
• What econometric problems will be investigated