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Making Sen’s capability approach operational. A random scale framework

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    Amartya Sen has developed the so-called capability approach to meet the criticism that income alone may be insufficient as a measure of economic inequality. This is because knowledge about people’s income does not tell us what they are able to acquire with that income. For example, people with the same income may not have the same access to health and transportation services, schools and opportunities in the labor market. Recently, there has been growing interest in empirical studies based on the capability approach. Most of these, however, are only loosely related to quantitative behavioral theory, at least in a concrete and empirically operational way. The purpose of this paper is to demonstrate that the theory of random scale (utility) models (RSM) offers a powerful theoretical and empirical framework for representing and accounting for key aspects of Sen’s theory.

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    File URL: http://www.ssb.no/a/publikasjoner/pdf/DP/dp710.pdf
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    Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number 710.

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    Date of creation: Oct 2012
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    Handle: RePEc:ssb:dispap:710
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    1. Dagsvik, John K. & Strøm, Steinar, 2004. "Sectoral labor supply, choice restrictions and functional form," Memorandum 13/2004, Oslo University, Department of Economics.
    2. Beggs, S. & Cardell, S. & Hausman, J., 1981. "Assessing the potential demand for electric cars," Journal of Econometrics, Elsevier, vol. 17(1), pages 1-19, September.
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    4. Van Praag, Bernard, 1971. "The welfare function of income in Belgium: An empirical investigation," European Economic Review, Elsevier, vol. 2(3), pages 337-369.
    5. Roberts, Fred S. & Rosenbaum, Zangwill, 1986. "Scale type, meaningfulness, and the possible psychophysical laws," Mathematical Social Sciences, Elsevier, vol. 12(1), pages 77-95, August.
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    7. McFadden, Daniel L., 2000. "Economic Choices," Nobel Prize in Economics documents 2000-6, Nobel Prize Committee.
    8. Paul Anand & Cristina Santos & Ron Smith, 2007. "The measurement of capabilities," Open Discussion Papers in Economics 67, The Open University, Faculty of Social Sciences, Department of Economics.
    9. John K. Dagsvik & Steinar Strøm & Zhiyang Jia, 2005. "Utility of Income as a Random Function. Behavioral Characterization and Empirical Evidence," Discussion Papers 431, Research Department of Statistics Norway.
    10. Van Herwaarden, Floor G. & Kapteyn, Arie, 1979. "Empirical comparison of the shape of welfare functions," Economics Letters, Elsevier, vol. 3(1), pages 71-76.
    11. Dagsvik, John K, 1994. "Discrete and Continuous Choice, Max-Stable Processes, and Independence from Irrelevant Attributes," Econometrica, Econometric Society, vol. 62(5), pages 1179-1205, September.
    12. Dreze, Jean & Sen, Amartya, 2002. "India: Development and Participation," OUP Catalogue, Oxford University Press, edition 2, number 9780199257492, March.
    13. van Praag, Bernard M. S., 1991. "Ordinal and cardinal utility : An integration of the two dimensions of the welfare concept," Journal of Econometrics, Elsevier, vol. 50(1-2), pages 69-89, October.
    14. Sen, Amartya, 1997. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198292975, March.
    15. Paul Anand & Graham Hunter & Ron Smith, 2005. "Capabilities and Well-Being: Evidence Based on the Sen–Nussbaum Approach to Welfare," Social Indicators Research, Springer, vol. 74(1), pages 9-55, October.
    16. Flinn, C. & Heckman, J., 1982. "New methods for analyzing structural models of labor force dynamics," Journal of Econometrics, Elsevier, vol. 18(1), pages 115-168, January.
    17. Sen, Amartya, 1991. "Welfare, preference and freedom," Journal of Econometrics, Elsevier, vol. 50(1-2), pages 15-29, October.
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