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

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  • Wiebke Kuklys

Abstract

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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    2. P. Jenkins, Stephen & Cappellari, Lorenzo, 2006. "Summarizing multiple deprivation indicators," ISER Working Paper Series 2006-40, Institute for Social and Economic Research.
    3. Pieroni, Luca & d'Agostino, Giorgio & Bartolucci, Francesco, 2013. "Identifying corruption through latent class models: evidence from transition economies," MPRA Paper 43981, University Library of Munich, Germany.
    4. Dreher, Axel & Kotsogiannis, Christos & McCorriston, Steve, 2007. "Corruption around the world: Evidence from a structural model," Journal of Comparative Economics, Elsevier, vol. 35(3), pages 443-466, September.
    5. 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.
    6. Erasmo, Valentina, 2021. "Extending Capabilities Conception of the Individual in Economics: Relationality and Responsibility," MPRA Paper 108487, University Library of Munich, Germany.
    7. Jerzy Michalek & Nana Zarnekow, 2012. "Application of the Rural Development Index to Analysis of Rural Regions in Poland and Slovakia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 105(1), pages 1-37, January.
    8. Paulo Mourao, 2020. "Exploring the Likelihood of a Country Being a Tax Haven Using MIMIC Models," Econometric Research in Finance, SGH Warsaw School of Economics, Collegium of Economic Analysis, vol. 5(1), pages 17-32, June.
    9. Nicolas Fayard & Chabane Mazri & Alexis Tsouki`as, 2021. "Is the Capability approach a useful tool for decision aiding in public policy making?," Papers 2101.09357, arXiv.org.
    10. Sebastian Silva-Leander, 2011. "On the Possibility of Measuring Freedom: A Kantian Perspective," OPHI Working Papers 49, Queen Elizabeth House, University of Oxford.
    11. Axel Dreher & Christos Kotsogiannis & Steve McCorriston, 2011. "The Impact of Institutions on the Shadow Economy and Corruption: A Latent Variables Approach," Chapters, in: Friedrich Schneider (ed.), Handbook on the Shadow Economy, chapter 13, Edward Elgar Publishing.
    12. Aloysius Mom Njong, Paul Ningaye, 2008. "Characterizing Weights in the Measurement of Multidimensional Poverty: An Application of Data-Driven Approaches to Cameroonian Data," OPHI Working Papers 21, Queen Elizabeth House, University of Oxford.
    13. Erasmo, Valentina, 2021. "Female economists and philosophers’ role in Amartya Sen’s thought: his colleagues and his scholars," MPRA Paper 105769, University Library of Munich, Germany.

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    More about this item

    Keywords

    Welfare measure; capability approach; structural equation modelling; poverty analysis;
    All these keywords.

    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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