A Monetary Approach to Capability Measurement of the Disabled – Evidence from the UK

In this paper we attempt to assess empirically the capability set ofthe disabled. We formulate the assumptions under which capability canbe interpreted as needs-adjusted disposable household income, and useequivalence scales methodology to estimate it for households in the UK.We identify a positive cost of disability to the households and state, towhat extent a disability can reduce an individual’s capability set. The useof the derived capability measure instead of traditional income in povertymeasures leads to a dramatic increase of poverty among the families withdisabled members.