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Between Income and Material Deprivation in the UK: In Search of Conversion Factors

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  • Rod Hick

Abstract

The claim that there are “conversion factors” between people's resources and their capabilities is fundamental to motivating the capability approach, yet is empirically relatively under-examined. The few analyses which exist focus typically on one group—disabled people—and focus overwhelmingly on current income as the relevant measure of resources. This article extends existing analysis on both fronts, analysing conversion factors for a broader range of groups than are typically considered and estimating conversion factors using both a current and five-year average measure of income. It is found that conversion factors based on a five-year average of current income are 40--45% lower than those based on current income. However, a conversion-adjusted income measure, whether based on current or five-year average income, still does not reflect “command over capabilities” because conversion factors are estimated on the basis of group averages, while needs vary for different groups and different households. The article concludes that understanding more clearly the nature of the conversion between resources and functionings or refined functionings represents an important task for those working with the capability approach.

Suggested Citation

  • Rod Hick, 2016. "Between Income and Material Deprivation in the UK: In Search of Conversion Factors," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 17(1), pages 35-54, February.
    • Handle: RePEc:taf:jhudca:v:17:y:2016:i:1:p:35-54
    DOI: 10.1080/19452829.2015.1076772
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    References listed on IDEAS

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    1. Van Kerm, Philippe & P. Jenkins, Stephen, 2011. "Trends in individual income growth: measurement methods and British evidence," ISER Working Paper Series 2011-06, Institute for Social and Economic Research.
    2. Zaidi, Asghar & Burchardt, Tania, 2003. "Comparing incomes when needs differ: equivalisation for the extra costs of disability in the UK," LSE Research Online Documents on Economics 6373, London School of Economics and Political Science, LSE Library.
    3. Tania Burchardt & Asghar Zaidi, 2003. "Comparing incomes when needs differ: Equivalisation for the extra costs of disability in the UK," CASE Papers case64, Centre for Analysis of Social Exclusion, LSE.
    4. Tania Burchardt & Asghar Zaidi, 2003. "Comparing incomes when needs differ: Equivalisation for the extra costs of disability in the UK," CASE Papers 064, Centre for Analysis of Social Exclusion, LSE.
    5. Asghar Zaidi & Tania Burchardt, 2005. "Comparing Incomes When Needs Differ: Equivalization For The Extra Costs Of Disability In The U.K," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(1), pages 89-114, March.
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    Cited by:

    1. Nikolova Milena & Popova Olga, 2021. "Sometimes Your Best Just Ain’t Good Enough: The Worldwide Evidence on Subjective Well-being Efficiency," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 21(1), pages 83-114, January.
    2. Enrica Chiappero‐Martinetti & Paola Salardi & Francesco Scervini, 2019. "Estimating conversion rates: A new empirical strategy with an application to health care in Italy," Health Economics, John Wiley & Sons, Ltd., vol. 28(6), pages 748-764, June.
    3. Henderson, Heath & Follett, Lendie, 2022. "Targeting social safety net programs on human capabilities," World Development, Elsevier, vol. 151(C).
    4. Mark Peacock, 2017. "An Embarrassment of Riches and a Surplus of Shame: Amartya Sen on Poverty and Deprivation," Poverty & Public Policy, John Wiley & Sons, vol. 9(4), pages 444-464, December.

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