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1.2 The locus of operationalization

From a theoretical point of view the reference unit of the capability approach is the
individual, functionings and capabilities being in fact properties of individuals. More
specifically, Sen moves in the space of ethical individualism and considers the individual as the
only unit that counts when evaluating social states. At the same time, he avoids reducing society
to the mere sum of individuals and their properties, as set by ontological individualism.
Actually, the conversion factors (i.e. personal and social characteristics) can help or hinder the
translation of commodities into functionings.

Notwithstanding, Sen himself in applying the capability approach refers to regional, national,
sub-national, or group data. For instance, when examining poverty and deprivation in India and
Sub-Saharan Africa (Sen, 1999:99-104), he draws on national and sub-national level data. Or,
when dealing with gender inequality, he works both with different territorial level data and
group data (Sen, 1999: 104-107).

The use of different units of analysis (groups based on age, gender, administrative boundaries
or other elements) in the empirical work points out intergroup variations, but according to Sen
(1992: 117, n.1) the focal point of the analysis remains the individual, since the interest in group
is only derivative (i.e. regarding the differences among individuals placed in different groups)
and not intrinsic (i.e. regarding the differences between groups seen as unique bodies). The
rationale for this shifting to an aggregate reference unit can be usefully found in Dasgupta
(1999:11): «Aggregate well-being for a given cohort of people will then be regarded to be the
average well-being of the cohort. The thought-experiment I invoke to do this is the now-familiar
conception due to Harsanyi (1955), in which the standard of living in a society is deduced to be
the expected living standard of someone who had equi-probability of finding themselves in the
place of each member of society».

In CFM the relevant unit of analysis is at sub-national level9 (we apply CFM to Italian
administrative regions), both for practical reasons and for comparison purposes (between Italian
regions). In spite of this assumption, we remain aware that a distinction, at least, of different
social groups would be very important: the real achievement of a functioning, besides depending
on commodities, results also from the individual characteristics of the beneficiaries. The
“generalist” conversion factors that we use can in fact render the translation of commodities into
functionings only at an aggregate level. If we had the possibility of identifying different social
groups based on some important individual characteristic such as age, we would have depicted a
more comprehensive model, in which the other conversion factors (environmental, social and
relational - see Sen, 1999: 70-71) would have played a more “targeted” translation role.
Anyway, loosing the keener in-depth perspective of individual analysis is the price we have to
pay to obtain a policy tool, which hopefully will be useful for simulations of well-being
dynamics over time.

1.3 The role of indicators

We intend by indicators «statistic of direct normative interest which facilitates concise,
comprehensive and balanced judgements about the condition of major aspects of a society. It is
in all cases a direct measure of welfare and is subject to the interpretation that if it changes in the
“right” direction, while other things remain equal, things have gotten better, or people are ”better
off”» (Olson, 1969:97). In CFM we use indicators both as proxy of commodities and of
conversion factors.

9 This is also the level of practical measures such as per capita GDP and UNDP’s Human Development Index.

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