This chapter aims to evaluate the empirical consequences of the theoretical debate on the nature of poverty, focusing in particular on the differences between Sen's capability approach and the mainstream monetary approach. Such an analysis provides a constructive link between theoretical debates and the practice of poverty assessments. In fact, if at the empirical level the association between alternative indicators of deprivations is so strong that different approaches appear as approximately equivalent, the policy relevance of the theoretical debates on the concepts of poverty is greatly diminished. We will explore whether this is really the case with reference to Peru. Beginning with a brief review of Sen's capability approach and its critique of standard monetary-based assessments of poverty, a framework for comparing capability-based and consumption-based approaches is suggested. Our results are then presented, aiming at identifying the relationship between monetary resources and individual achievements by testing for the significance and size of the ‘parametric variations’ at the core of Sen's argument against identifying poverty with monetary indicators. The findings are, however, also helpful to think of policy priorities in a capability perspective as opposed to a monetary one, as well as for identifying issues on which more work is needed in order to enhance the ability of the capability approach to inform policies.

Introduction

Poverty as a category is hard to define.