Amartya Sen has developed the so-called capability approach to meet the criticism that income alone may be insufficient as a measure of economic inequality. This is because knowledge about people’s income does not tell us what they are able to acquire with that income. For example, people with the same income may not have the same access to health and transportation services, schools and opportunities in the labor market. Recently, there has been growing interest in empirical studies based on the (...) capability approach. Most of these, however, are only loosely related to quantitative behavioral theory, at least in a concrete and empirically operational way. The purpose of this paper is to demonstrate that the theory of random scale models offers a powerful theoretical and empirical framework for representing and accounting for key aspects of Sen’s theory. (shrink)

This paper discusses random utility representations of the Luce model. Earlier works, such as McFadden, Yellott, and Strauss have discussed random utility representations under the assumption that utilities are additively separable in a deterministic and a random part. Under various conditions, they have established that a separable and independent random utility representation exists if and only if the random terms are type III extreme value distributed. This paper analyzes independent random utility representations without the separability condition and with an infinite (...) universal set of alternatives. Under these assumptions, it turns out that the most general random utility representation of the Luce model is a utility function that is an arbitrary strictly increasing transformation of a separable utility function with extreme value distributed random terms. (shrink)

In both theoretical and applied modeling in behavioral sciences, it is common to choose a mathematical specification of functional form and distribution of unobservables on grounds of analytic convenience without support from explicit theoretical postulates. This article discusses the issue of deriving particular qualitative hypotheses about functional form restrictions in structural models from intuitive theoretical axioms. In particular, we focus on a family of postulates known as dimensional invariance. Subsequently, we discuss how specific qualitative postulates can be reformulated so as (...) to allow for conventional statistical hypothesis testing, and we also derive details of a particular likelihood ratio test procedure. An empirical application of the testing procedure is carried out, based on data from a Stated Preference survey. (shrink)