At a time when well-being was measured as either opulence (income) or utility (happiness, desire fulfilment), Amartya Sen introduced a more elaborate human development model that included social and psychological dimensions.

Developed in various documents from the early 1980s onwards, the Capability Approach (CA) evaluates well-being in terms of “capabilities”, the real opportunities available to individuals to do and be what they have reason to value. The selection and weighting of these capabilities depend on personal value judgments and constitute a choice between possible life-styles. The development process is hence seen as one of expanding capabilities.

The CA has since emerged as the leading alternative to standard economic frameworks for thinking about poverty, inequality and human development generally and it underpins the Human Development Index used in the UN Development Programme’s annual Human Development Reports.
The CA also constitutes a conceptual framework for sustainable development at a global scale: Sustainable development aims to ensure well-being of present and future generations and this is only possible if worldwide population has enough capabilities to satisfy its needs. In this sense the approach provides a framework to assess individual well-being, evaluate social arrangements and design policies and proposals about social change in society.

See Sen, A. (1983) Poor, relatively speaking. Oxford Economic Papers (New Series) 35(2), 153-169