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Conversion Efficiency as a Complementing Measure of Welfare in Capability Space

Binder, Martin and Broekel, Tom (2008): Conversion Efficiency as a Complementing Measure of Welfare in Capability Space.

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Abstract

In the capability literature, studies on the empirical measurement in the functionings space are abundant and a few studies even measure capability to function. We suggest adopting a third measure of welfare relevant to economists, namely the "conversion efficiency" measuring the efficiency with which individuals convert their resources into achieved functioning. We use a nonparametric efficiency procedure and construct such a measure for a basket of basic functioning achievement, using data from the British Household Panel Survey (BHPS).

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