Reexamination of Evaluating Capability Assignments: Alternative Methods of Multidimensional Poverty Indices Approach in Terms of Opportunity-Sensitive Evaluations

Sakamoto, Norihito (2016). 'Reexamination of Evaluating Capability Assignments: Alternative Methods of Multidimensional Poverty Indices Approach in Terms of Opportunity-Sensitive Evaluations' Paper presented at the annual conference of the HDCA, Tokyo 2016.

We consider the evaluation problem of capability assignments in the standard economic model except for explicitly considering the space of functionings. While predominant approaches for evaluating capabilities have focused on achieved functionings such as multidimensional poverty indices, the approaches fail to directly evaluate both individuals’ opportunities and value judgments on capabilities reasonable persons actually consider. Therefore, we will explore alternative methods by shedding light on not only achieved functionings but also opportunities and individual value judgements on their capabilities. Our main results are follow as:
There are two different approaches for achieving the equality of capabilities: one is focusing on maximizing an intersection of all persons’ capability sets (Sen 1985; Herrero, et al. 1998; Gotoh and Yoshihara 2003; Echavarri and Permanyer 2008; Sakamoto 2016) and the other is focusing on equalizing the values of all persons’ capability sets by some social value judgment defined on capabilities (Yoshihara and Xu 2009; Sakamoto 2016). Then, the former approach has a defect in the sense that focusing on the intersection of capabilities often forces a person with some disabilities to make great efforts to get an expected opportunity set seemed to be easily achieved by ordinary people. Hence, we conclude that the latter approach can provide more attractive method for evaluating capability assignments.
By the well-known indexing dilemma problem shown by Fleurbaey (2007), we have only two evaluation methods for comparing interpersonal well-being in order to equalize the values of all persons’ capabilities. If we respect Liberalism Principle ---all social value judgments for interpersonal comparison on each individual’s situation should respect individuals’ value judgments on their own situations--, then we must follow the narrower class of egalitarian equivalence evaluation in the context of the capability approach (CA, hereafter). If we respect Dominance Principle -- whenever an individual i’s capability set is a strict superset of j’s one, i’s situation is strictly better than j’s situation--, we must follow a class of extensions of Pareto quasi orderings in CA or rankings satisfying Dominance Principle which are given exogeneously or partially reflected of persons’ value judgements on capabilities.
A ranking based on the egalitarian equivalent approach such as the Pazner-Schmeidler ranking applied for CA is nearly consistent with health equivalent incomes approach proposed by Fleurbaey if each capability would be just determined by compounds of each person’s health and income level. However, the health equivalent incomes approach cannot perfectly solve the problem of adaptive preference which often seems to be harmless by extending the informational basis of social welfare judgments to the space of functionings instead of the space of utilities. A ranking based on the Paretian social value judgment could form various one, but it ends up dictatorship whenever we impose IIA and Completeness upon the social ranking. On the other hand, a class of rankings satisfying Dominance Principle would be independent from or limited reflection of each individual’s value judgment on capabilities. Hence, if we respect Liberalism Principle, then we must face with the difficulty of adaptive preference. If we respect Dominance Principle, then we must partially or exclusively ignore individuals’ value judgments.
Echavarri, R. and I. Permanyer (2008) “Ranking Profiles of Capability Sets,” Social Choice and Welfare, Vol. 31, pp. 521-535.
Fleurbaey, M. (2007) “Social Choice and the Indexing Dilemma,” Social Choice and Welfare, Vol. 29, pp. 633-648.
Gotoh, R. and N. Yoshihara (2003) “A Class of Fair Social Choice Correspondences a la Rawls and Sen,” Economic Theory, Vol. 22, pp. 63-88.
Herrero, C., I. Iturbe-Ormaetxe, and J. Nieto (1998) “Ranking Opportunity Profiles on the Basis of the Common Opportunities,” Mathematical Social Sciences, Vol. 35, pp. 273-289.
Sakamoto, N. (2016) “Characterizations of Social Choice Correspondences Based on Equality of Capabilities in a Pure Exchange Economy,” Presented Paper at The 13th Meeting of the Society for Social Choice and Welfare 2016.
Sen, A. K. (1985) Commodities and Capabilities, Amsterdam: North-Holland.
Xu, Y. and N. Yoshihara (2009) “Bargaining Theory over Opportunity Assignments and the Egalitarian Solution,” IER Discussion Paper Series A, No.517, Institute of Economic Research, Hitotsubashi University.

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