Wellbeing, Freedom and Social Justice The Capability Approach Re-Examined, 2017a

206 Wellbeing, Freedom and Social Justice
make to the life-satisfaction of people, after those weights are cleaned of
ethically suspicious information.
However, as we saw in section 4.10.1, many (possibly most)
economists are unwilling to engage in explicit evaluations, since they
believe in the science/value split and believe that economics can be
value-free. This makes it harder for welfare economics to engage in such
normative work, since they run the risk that their peers will no longer
accept their approach as ‘economics research’. But it is inconsistent to
reject all explicit evaluative exercises. Economists are happy working
with GNP per capita and real income metrics as proxies of welfare,
which uses market prices as the weights. But this is equally normative:
it is assumed that the welfare-value of a certain good for a person is
reflected by the price that the good commands on the market. This is
problematic, for reasons that have been explained repeatedly in the
literature. For one thing, market prices reflect demand and supply
(and thus relative scarcity of a good) — diamonds are expensive and
water (in non-drought-affected places) is cheap — but this doesn’t say
anything about their importance for our wellbeing. Moreover, market
prices do not take into account negative or positive welfare effects on
third parties, the so-called externalities, despite their omnipresence
(Hausman 1992).
Of course, it may be that, upon reflection of the various weights
available, some capability theorists will conclude that the set of
market prices, possibly combined with shadow prices for non-market
goods, is the best way to proceed. That is quite possible, and would
not be inconsistent with the general claim in the capability approach
that weights need to be chosen. The point is rather that the choice of
weights needs to be done in a reflective way, rather than simply using the
weighing scheme that is dominant or customary. I take it that this is the
point Sen is trying to make when he argues that “Welfare economics is
a major branch of ‘practical reason’” (Sen 1996, 61). 16
16 Note also that for welfare economists, an important concern in examining and
developing a capabilitarian welfare economics will be the question of how it can be
formalized. On formalizations of the capability approach, see Sen (1985a); Kuklys
and Robeyns (2005); Basu and López-Calva (2011); Bleichrodt and Quiggin (2013).