Disentangling the Circularity inSen’s Capability Approach – AnAnalysis of the Co-Evolution of FunctioningAchievement and Resources

There is an ambiguity in Amartya Sen's capability approach as to what constitutes an in-dividual's resources, conversion factors and valuable functionings. What we here call the\circularity problem" points to the fact that all three concepts seem to be mutually en-dogenous and interrelated. All three are entangled and it can be conjectured that somefunctionings are resources for the achievement of other functionings, some resources can beconceived to be actually valuable functionings, and both could be conversion factors in theachievement of other functionings. To econometrically account for this interdependency wesuggest a panel vector autoregression approach. We analyze the intertemporal interplay ofthe above factors over a time horizon of fteen years using the BHPS data set for GreatBritain, measuring individual well-being in functionings space with a set of basic function-ings, comprising \being happy", \being healthy", \being nourished", \moving about freely",\being well-sheltered" and \having satisfying social relations".[...]