Amartya Sen #1
This is Sen at his most philosophical, and I think he is basically correct on this point, namely that there is more to the standard of living concept than at first meets the eye.
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I really don't understand how Sen's decision-making criteria are useful. Every policy decision is about tradeoffs - e.g., PolicyA helps families educate their children, and PolicyB helps families feed their children. How does Sen propose to value these, and to compare the valuation? In a world of scarcity, where only the best projects can be funded, we need some valuation strategy that ends up with all policy outcomes quantified in the same units, so that we can say "A > B, so we should fund A". I don't see how Sen can accomplish that.
I am by no means expert on Sen, but I have read one of his papers (in the context of a college course on political philosophy), which you might find useful. Try to look up his paper, "Equality of What?". This addresses a twist of your question. Namely, the same challenge that confront those interested in development, also confronts those interested in evaluating distributive justice in a society. In particular, if you believe in a (partially) "egalitarian" conception of distributive justice, you must specify the metric to evaluate the degree to which a particular society or outcome is egalitarian. What I take to be a major point of Sen (and I could be totally wrong, so take this with a grain of salt), is that it is *far* from obvious how to specify such a metric. In the paper I allude to, he contrasts his "capabilities-based" notions with more common notions in political philosophy. (For example, utilitarianism -- which in the context of development, one might compare to the use of a naive wealth statistic like GDP as a decision-making criterion. As another example, he also considers Rawls' "minimax" criterion, from "A theory of justice".) It has been a while since I looked at the paper, but I remember sharing some of your skepticism regarding how *useful* the capabilities-based framework is. I consider it an open question whether *any* way of "operationalizing" it (to use Tyler's term) would in fact reduce it to one of the alternative metrics Sen criticizes. But again, I don't know enough about Sen's work to have a lot of confidence in my view. It might be helpful to consult the Stanford Encyclopedia of Philosophy (http://plato.stanford.edu/entries/capability-approach/).
Development as freedom is very good, at least the first three chapters (if I remember correctly). It is not a casual airplane read, but it really showcases Sen as a first rate philosopher, someone that can think in a novel way and explain that thought intelligibly
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