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Measuring Standard of Living in the UK - An Application of Sen's Functioning Approach Using Structural Equation Models


  • Wiebke Kuklys



This paper contributes to the multidimensional welfare measurement literature inspired by Sen's functioning approach. After reviewing the different statistical techniques used in multidimensional welfare measurement, we suggest structural equation modelling as an appropriate alternative to measure and model the achievement of welfare. Functionings are conceptualised as latent variables which can only be measured with error. We assess what determines the achievement of these functionings, and compare the numerical functionings values with income in a simple poverty analysis.

Suggested Citation

  • Wiebke Kuklys, 2004. "Measuring Standard of Living in the UK - An Application of Sen's Functioning Approach Using Structural Equation Models," Papers on Strategic Interaction 2004-11, Max Planck Institute of Economics, Strategic Interaction Group.
  • Handle: RePEc:esi:discus:2004-11

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    References listed on IDEAS

    1. Mozaffar Qizilbash, 2002. "A note on the measurement of poverty and vulnerability in the South African context," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(6), pages 757-772.
    2. Erik SCHOKKAERT & Luc VAN OOTEGEM, 1990. "Sen's Concept of the Living Standard applied to the Belgian Unemployed," Discussion Papers (REL - Recherches Economiques de Louvain) 1990039, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    3. Burchardt, Tania & Le Grand, Julian, 2002. "Constraint and opportunity: identifying voluntary non-employment," LSE Research Online Documents on Economics 4650, London School of Economics and Political Science, LSE Library.
    4. Alkire, Sabina, 2005. "Valuing Freedoms: Sen's Capability Approach and Poverty Reduction," OUP Catalogue, Oxford University Press, number 9780199283316.
    5. Burchardt, Tania & Le Grand, Julian, 2002. "Constraint and opportunity: identifying voluntary non-employment," LSE Research Online Documents on Economics 51317, London School of Economics and Political Science, LSE Library.
    6. Klasen, Stephan, 2000. "Measuring Poverty and Deprivation in South Africa," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(1), pages 33-58, March.
    7. François Bourguignon & Satya Chakravarty, 2003. "The Measurement of Multidimensional Poverty," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 1(1), pages 25-49, April.
    8. Raiser, M. & Di Tommaso, M.L. & Weeks, M., 2000. "The Measurement and Determination of Institutional Change: Evidence from Transition Economics," Cambridge Working Papers in Economics 0029, Faculty of Economics, University of Cambridge.
    9. Wiebke Kuklys & Ingrid Robeyns, 2004. "Sens's Capability Approach to Welfare Economics," Papers on Strategic Interaction 2004-03, Max Planck Institute of Economics, Strategic Interaction Group.
    10. Joseph G. Hirschberg & Esfandiar Maasoumi & Daniel J. Slottje, 2001. "Clusters of attributes and well-being in the USA," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 445-460.
    11. Ram, Rati, 1982. "Composite indices of physical quality of life, basic needs fulfilment, and income : A principal component representation," Journal of Development Economics, Elsevier, vol. 11(2), pages 227-247, October.
    12. A. B. Atkinson & F. Bourguignon, 1982. "The Comparison of Multi-Dimensioned Distributions of Economic Status," Review of Economic Studies, Oxford University Press, vol. 49(2), pages 183-201.
    13. Tania Burchardt & Julian Le Grand, 2002. "Constraint and Opportunity: Identifying Voluntary Non-Employment," CASE Papers case55, Centre for Analysis of Social Exclusion, LSE.
    14. Maasoumi, Esfandiar & Nickelsburg, Gerald, 1988. "Multivariate Measures of Well-Being and an Analysis of Inequality in the Michigan Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 6(3), pages 326-334, July.
    15. Serge-Christophe Kolm, 1977. "Multidimensional Egalitarianisms," The Quarterly Journal of Economics, Oxford University Press, vol. 91(1), pages 1-13.
    16. Maasoumi, Esfandiar, 1989. "Continuously distributed attributes and measures of multivariate inequality," Journal of Econometrics, Elsevier, vol. 42(1), pages 131-144, September.
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    Cited by:

    1. Axel Dreher & Christos Kotsogiannis & Steve McCorriston, 2009. "How do institutions affect corruption and the shadow economy?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(6), pages 773-796, December.
    2. Sebastian Silva-Leander, 2011. "On the Possibility of Measuring Freedom: A Kantian Perspective," OPHI Working Papers ophiwp049, Queen Elizabeth House, University of Oxford.
    3. Axel Dreher & Christos Kotsogiannis & Steve McCorriston, 2011. "The Impact of Institutions on the Shadow Economy and Corruption: A Latent Variables Approach," Chapters,in: Handbook on the Shadow Economy, chapter 13 Edward Elgar Publishing.

    More about this item


    Welfare measure; capability approach; structural equation modelling; poverty analysis;

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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