To render the richness of the structure in the following section we analyze in detail the
functioning PPH and its interrelations. But, before proceeding, we have to make clear the basic
simplifying assumptions of our tentative model.
1. The choice of all elements of the model (i.e. all the indicators proxy of commodities and
conversion factors) is heavily constrained by data availability. So, the indicators chosen
aren’t necessary the right ones, or even the most suitable: they are simply those among
the available ones which, in our opinion, best fit the purposes of the experiment.
2. Both commodities and conversion factors can refer to different functionings.
3. The only indicators that can change are the ones referred to commodities. In other words
the dynamism of the system depends solely on the growth rate of the indicators proxy of
commodities. So, as mentioned, they are the only source of dynamism.
4. The commodities are the only elements whose change can produce variation in other
commodities of the system. Therefore, positive and negative interactions within the
system relate only to the relative indicators proxy of commodities.
5. The mathematical functions of these interactions are drawn from the literature, since the
analysis of the available data (referring only to Lombardy) did not highlight any relation,
neither linear, via a fixed effect regression analysis (with n - 1 dummies), nor non-linear.
Therefore we derive only a limited number of interactions, ignoring the ones for which
we didn’t find any supporting literature.
6. All the conversion factors have equal weight and do not interact one each other.
7. The “direction” of the conversion factors is commonsensical and self-evident: we do not
support it with any proof.
These assumptions23 may seem rather restrictive or even quizzical, but we have introduced
them in our exploratory simulations only for the sake of simplicity, aware that without
specifications the capability approach may prove to be inapplicable. The ultimate purpose of the
model, at this stage, is to verify the use of system dynamics in order to clarify knowledge and
understanding of the empirical potentiality of the capability approach, and not to offer
conclusive information regarding well-being, nor, for the moment, to ascertain policies that will
improve system behavior. Therefore these assumptions can and should be dropped by more
realistic - and complex - exercises.
23 Behind these assumptions there are of course value judgments. Sen, though acknowledging the importance of
value judgments for the practical use of the capability approach, has, once again, never specified them.
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