Amartya Kumar Sen

Presentation by :-Prashant SavaliyaKamlesh Negi Omkar KhalanKamlajeet KundraBhupendra Patil

BATCH -18 B

He was born on 3 November 1933 in Santiniketan Univ campus , West Bengal. His ancestral home was at Wari, Dhaka which is now in Bangladesh. He is an Indian Nobel Prize-winning economist, He is known for his work on

Welfare economics Poverty and Famines Choice of Techniques Development as Freedom Economic Inequality Food Economics and Entitlements

He received the Nobel Memorial Prize in Economics for his work in welfare economics He received the Bharat Ratna award He received the 2000 Leontief Prize for his outstanding contribution to economic theory He received Life Time Achievement award by Bangkok-based United Nations Economic and Social Commission

for Asia and the Pacific (UNESCAP)

Amartya Kumar Sen (HON)

Some theories of Amartya Sen which we will see

Welfare economics Choice of Techniques Poverty and Famines Culture & Development

What is welfare ? Welfare is financial assistance program funded by tax payers, for taxpayers who are no

longer capable of supporting themselves and/or their families. OR In Simply - Governmental provision of economic assistance to persons in need

What is welfare economics ?– Welfare economics is concerned with evaluation of the level of individuals & social welfare &

its impact on economic & social policies – The welfare of an individual represented by utility (i.e satisfaction )– welfare can be adequately measured by monitory variable i,e either in dollars or some other unit of currency– It attempts to maximize the level of social welfare by examining the economic activities of the

individuals that comprise society.

What is Social welfare ?• It is defined as the summation of the welfare of all the individuals in the society by mean of aggregator function i.e (social welfare function ) • Welfare can be measured either cardinally in terms of dollars , or measured in terms of

relative utility. The cardinal method is less used today because of aggregation problems it make the accuracy of the method doubtful.

Amartya Sen has also created a formula to measuring welfare in a society, using indicators like income per capita, which measures average salary of the society .The formula is

Welfare = Y * (1 - G)• Here Y is the income per capita and G is the Gini coefficient,

o Gini coefficient• The Gini coefficient is a number between 0 and 1, • where 0 means perfect equality (everyone has the same income)• and 1 means perfect inequality (one person has all the income, everyone else earns

nothing). While the Gini coefficient is mostly used to measure income inequality, it can be used to measure wealth inequality as well.

• The Gini coefficient is calculated using Lorenz curve diagram which is the area between the line of perfect equality and the Lorenz curve, as a percentage of the area between the line of perfect equality and the line of perfect inequality.

How to measure Welfare ?

A perfectly equal income distribution in a society would be one in which every person has the same income. In this case, the bottom N% of society would always have N% of the income. Here perfectly equal distribution can be depicted by the straight line y=x; we call this line as line of perfect equality. A perfectly inequal distribution, by contrast, would be one in which one person has all the income and everyone else has none. In that case, the curve would be at y=0 for all x<100, and y=100 when x=100. We call this curve the

line of perfect inequality.

Social welfare function A social welfare function, in welfare economics it is a function which gives a measure of welfare of

society, using number of economic variables as inputs. Kenneth Arrow is an American economist proved that it is impossible to have a social welfare

function But Abram Bergson coma up with social welfare function in 1938.

The social welfare function can be expressed as a function of variables relevant to welfare, such as income or life expectancy.

W = Y1 + Y2 + ....+ Yn Where W is social welfare and Y is the income of each of the Xth individual in a society.

In this case, maximising the social welfare function means maximising the total income of the people in the society, without regard to how incomes are distributed in society

Alternatively, the social welfare function can also be expressed with Max-Min utility function (based on the philosophical work of John Rawl)

W = min(Y1, Y2, .... ,Yn) Here, the W-social welfare of society is taken to be related to the income of the poorest

person in the society, and maximising welfare would mean maximising the income of the poorest person without regard for the incomes of the others.

These two social welfare functions express very different views about how a society would need to be organised in order to maximise welfare, with the first emphasizing total incomes and the second emphasising the needs of the poorest

It is define as a state of affairs when in a country there are a large number of able-bodied persons of working age who are willing to work but cannot find work at the current wage levels.

Also People who are either unfit for work for physical or mental reason,or don`t want to work.

Unemployment

There are three main types of Unemployment.

Frictional Unemployment – Switching of company

Structural unemployment- Change technology

Cyclic unemployment – recession or depression

Types of Unemployment

Causes of Unemployment in developed and undeveloped countries

•The nature of un employment in under-developed countries is quite different from developed countries

•In Un-developed countries unemployment is chronic & long term in nature . It is almost universally recognized that chronic unemployment is not due to deficiency of aggregate effective demand rather it is due to lack of land, capital & other complimentary recourses in term of total population and labour force

•In developed countries Major part of unemployment in present day is of cyclical nature and is due to deficiency of aggregate effective demand

•While in developing countries there is not much short term unemployment

According to some economists, disguised unemployment in agriculture exists in densely populated countries such as India, Pakistan, Bangladesh, etc.

As defined by professor Rodan, disguised unemployment is the amount of population in agriculture which can be removed from it without any change in the method of cultivation, without leading to any reduction in output.

Lack of stock of physical capital

Use of capital intensive techniques

Inequitable distribution of land

Rigid protective labour legislation

Lack of Infrastructure

Role of Agriculture in employment generation

FaminesFamines

Famines doesn’t need to occur when food supply is low. It can even occur when food supply is high enough, but the people are unable to buy it because they don’t have

any money

Causes of Famines are:

• Natural disasters (Floods, Drought, Volcanic eruptions,Earthquakes)

• Over Populated Areas, that are unable to feed masses of people.

• Poor Quality of Health Facilities.

• Govt. that have poor management of resources.

Many of the biggest mass starvations have been intentional

Stalin targeted Ukranians in 1924,

Stalin proceeded to collectivize the farms, expropriating the land, killing thousands

While millions starved, food was shipped out of the Ukraine and no food was allowed in.

Desperate Ukraines ate dogs, cats, bark. Cannibalism was not uncommon.

At least 4 million died in the Ukraine. In China during the “Great Leap

Forward,” some 30 million people died of starvation.

Causes of Mass StarvationCauses of Mass Starvation

Mass Starvation in Bangladesh, 1974

• The 1974 famine in Bangladesh was not as same as the size of the Ukraine or China, perhaps 26,000-100,000 people died of mass starvation but it was probably the first televised starvation and it illustrates many important themes.

Floods destoyed much of the rice crop of 1974 at the same time as world rice prices were increasing.

Before the floods destroyed rice they destroyed livelihoods. The floods meant that there was no work for landless rural labourers who in ordinary years would have been employed harvesting the rice.

Without income from work and facing rising world rice prices caused for other reasons there was mass starvation.

As Amartya Sen puts it:

“A food-centred view tells us rather little about starvation. It does not tell us how starvation can develop even without declines in food availability. Nor does it tell us – even when starvation is accompanied by a fall in the food supply – why some groups had to starve while others could feed themselves…What allows one group rather than another to get hold of the food that is there? These questions lead to the entitlement approach…For example, a barber owns his labour power and some specialized skill, neither of which he can eat, and he has to sell his hairdressing services to earn an income to buy food. His entitlement to food may collapse even without any change in food availabilty…”

How famines can be prevented How famines can be prevented

Supporting farmer in area of food insecurity, providing them subsidized fertilizer and seed

Increase food harvest and reduce food price

Unintentional starvations can also be avoided since the main thing that is required is the government will to redistribute wealth or employment, and usually not much is required, to those people who most need it.

Democracy and Media alos play an imp role in Preventing Famines > Famines have never happened in modern countries because

the Media and leaders of such nations are spurred into action by free-reporting and political reasons respectively to save their citizens.

What is Culture?

Culture is an integrated pattern of human knowledge, belief, and behavior that depends upon the capacity for symbolic thought and social learning.

What is Development?

Economic development refers to increases in the standard of living of a nation's population associated with sustained growth from a simple, low-income economy to a modern, high-income economy. Its scope includes the process and policies by which a nation improves the economic, political, and social well-being of its people.

How Culture & Development is interrelated / influence each other?

As per Amartya Sen, Culture matters are integral parts of the lives we lead. If development can be be seen as enhancement of our living standards, then the effort geared to development can hardly ignore the world of culture.

He says that cultural conditions can exert a strong influence on human behavior, and through that can affect economics choices and business decision, as well as social and political behavior.

What is Democracy ?

A political system in which the supreme power lies in a body of citizens who can elect people to represent them.

In Other Words Democracy is:For the people, By the People, Of the People

Thank You