Going Beyond Functionings to Capabilities: An Econometric Model to Explain and Estimate Capabilities
Any attempt to operationalize the capability approach necessitates an adequate framework for the measurement of the abstract unobservable multidimensional concept that the term 'capability' stands for. One such attempt is the latent variable approach, which considers the different dimensions of capability or human development as unobserved variables (factors) manifesting themselves through measurable indicators. In this paper, we propose a structural equation econometric model that accounts for the interdependence among the latent dimensions and other observed endogenous factors and includes causal exogenous variables affecting the latent dimensions and their indicators. We estimate the model using data on a cross-section of countries across the world and use our empirical model to derive capability indicators in different dimensions.
Volume (Year): 8 (2007)
Issue (Month): 1 ()
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- Lars Osberg & Andrew Sharpe, 2003. "Human Well-being and Economic Well-being: What Values Are Implicit in Current Indices?," CSLS Research Reports 2003-04, Centre for the Study of Living Standards.
- Basudeb Biswas & Frank Caliendo, 2002. "A Multivariate Analysis of the Human Development Index," Working Papers 2002-11, Utah State University, Department of Economics.
- Muthen, Bengt, 1983. "Latent variable structural equation modeling with categorical data," Journal of Econometrics, Elsevier, vol. 22(1-2), pages 43-65.
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