On the measurement of human well-being : fuzzy set theory and Sen's capability approach

Sen’s influential work on human development has led economists to explore new areas that have become increasingly important for human well-being. In particular, Sen emphasizes the importance of the "freedom to choose". Freedom, however, is not always an exact (crisp) outcome, and membership in the freedom space can take place gradually. This paper proposes a framework that uses fuzzy-set theory to measure human well-being in consistence with Sen’s Capability Approach. The results indicate that the UNDP's Human Development Index and human well-being, as measured using fuzzy sets, yield different country rankings and significantly different levels of well-being for some countries. Thus, it is important to bear in mind that preferences and choices underlying both objective and subjective indicators of human well-being are vague; and that such vagueness can have major implications for the outcome of social and economic policies.