Linking functionings, capabilities, agency and well-being adapted from the human development and capability approach

The capability approach highlights that promoting internal and external ‘freedoms’ involve two distinct yet inter-related tasks. A society that wants to promote the most important human capabilities will support both the development of internal capabilities and ensure appropriate opportunities to access education and employment, resources to enhance physical &

PhD Thesis 30

Vinita Godinho

Graduate School of Business & Law

capabilities yet cut off avenues through which people actually have the opportunity to function in accordance with those capabilities (eg. educate people on freedom of speech or religion yet deny them free expression in practice). Alternatively the state could develop external capabilities but not offer basic health and education that would enable everyone to participate.

This approach therefore allows policymakers to focus on both the demand and supply sides of the financial exclusion debate i.e. individuals must have the understanding, knowledge and skills to achieve the financial goals they value, but they also need access to a financial system that is appropriate, based on their own values and needs. Recent research (Federal Deposit Insurance Corporation 2012) similarly concludes that policymakers must make the effort to better understand the characteristics and needs of different segments of financially excluded populations.

Just providing a bank account (i.e. ensuring people are able to be ‘banked’) is not enough to endure longer-term participation in the financial system. The financial system must be able to more clearly demonstrate the value of participation to users, else they may prefer to remain outside the formal mainstream system. Financial inclusion must encourage people to develop their capabilities and provide appropriate access, to ensure that people have the freedom of choice to live a life they value (Singh 2013).

The role of education and culture in development and ensuring well-being Some aspects of public policy-making are foundational particularly ensuring health, education and employment which promote capabilities by enlarging people’s choices to achieve their own goals. In particular education brings empowerment – it opens the mind to

PhD Thesis 31

Vinita Godinho

Graduate School of Business & Law

further horizons, and also opens the way to acquire other valuable capabilities such as employment, social and political participation.

However, for education to be translated or ‘converted’ into valuable outcomes, one must focus not just on ‘functionings’ (i.e. actual educational achievements) but also ‘capabilities’ (i.e. the real freedom or opportunities each student has, to choose and achieve what they value) by considering the importance of ‘conversion’ factors and diverse institutional arrangements (Alkire & Deneulin 2009). ‘Conversion’ here refers to internal factors including how individuals learn, or understand the value of education, as well as external ones such as the quality of educators, institutional provisions, discrimination experienced etc.

This approach connects with Freire’s earlier work (Freire 1970; Freire 1985) which

considered teaching and learning to be political and cultural processes. The political nature of education reflects the values and perspectives that teachers and students bring to a learning situation, the way teaching and learning occurs, the forms of assessment and evaluation, institutional arrangements such as funding, curriculum etc. The cultural nature of education though, is about fostering freedom i.e. teaching and learning must be situated within a social, political and cultural context.

Pedagogy should enable people to become more fully human and transform the world. Instead of ‘banking education’ i.e. transmit ideas into blank and passive containers which then reproduce these ideas in an uncritical fashion, education should be ‘problem-posing’ i.e. involve learners as agents with a dialogical and critical approach to education. Instead of a culture of passivity, the latter approach allows people the ‘freedom’ to find their own voice, and effect change for themselves.

PhD Thesis 32

Vinita Godinho

Graduate School of Business & Law

More recently studies (Collins et al. 2009) have highlighted a similar message, showing that the poor proactively manage money using formal and informal tools, in ways that connects them to their family, kin and neighbourhood. Unlike previous notions that the poor have too little money to have a financial life, this study shows the money management is important for the poor and if they had reliable access to better financial tools, they could likely improve their lives. They need but seldom receive, help with managing money on a day-to-day basis, building savings over the long-term and borrowing small amounts. Prahlad (Prahlad & Hart 2002) similarly argues that the poor should not be seen as ‘passive’ receivers but as value- conscious and entrepreneurial consumers who need to be served. Business practices need to change, to serve those in the bottom of the pyramid.

The human development and capability approach has also considered ‘cultural freedom’. Sen himself (Sen 1999) discusses culture only obliquely i.e. in considering whether economic development which leads to elimination of traditions and cultural heritage could be

considered harmful, he focuses on enabling people to make their own choices i.e. is it better to be rich and happy, than impoverished and traditional? Any ‘conflict’ between preservation of traditions and the advantages of modernity, calls for a participatory resolution by people themselves exercising choice.

Nussbaum (2001) focuses on women and cultural traditions which pose obstacles to their health and flourishing, whilst the Human Development Report (United Nations Development Program 2004) considers ‘cultural liberty’ as being able to choose one’s identity, who one is, without losing the respect of others, or being excluded from other choices. This liberty is an important part of life and entitlements, the denial of which leads to significant deprivations. These studies highlight the importance of individual choice.

PhD Thesis 33

Vinita Godinho

Graduate School of Business & Law

Others (Rao & Walton 2004) describe the importance of incorporating a culturally-informed perspective or ‘lens’ when considering development policies. This lens is a way of seeing individuals as driven by a culturally-informed set of motives, incentives, beliefs and

identifies, that interact with economic incentives to affect outcomes. This guides my study to adopt an Indigenous lens to consider the Indigenous worldview of money and finances, and how development can enable them to achieve the financial future that they value.

Another study (Appadurai 2004) posits that development needs are always grounded in culture, since aspirations form parts of wider ethical and metaphysical ideas, which derive from larger cultural norms. The author goes on to identify three levels that ground people’s aspirations in culture – the first and most immediate level consists of a ‘visible inventory of wants’ that people consciously identify and seek to pursue. The next level has ‘intermediate norms’ which people may not explicitly express, yet structure specific wants through local ideas. These in turn relate to ‘higher order normative contexts’ which comprise a larger ‘map’ of ideas and beliefs such as life and death, the value of material goods versus social

relationships etc. Culture is therefore not separable from everyday life but instead structures material and relational desires through a cascade of associations that make them meaning, pressing and urgent.

Recent research on financial education programs targeting Indigenous populations in

Australia, Canada, New Zealand and the United States (Brascoupe', Weatherdon & Tremblay 2013) has explored the link between financial literacy, culture and community. It finds three best-practice elements that successful programs have in common – they are developed in partnership with Indigenous organisations, are designed for and by community members, and have ‘culturally appropriate’ content.

PhD Thesis 34

Vinita Godinho

Graduate School of Business & Law

These studies resonate with the tenets of the Indigenous research paradigm and methodology that informed my study, as well as the many of the stories I heard from my participants throughout my research. Considerations such as what education should entail, and the importance of using an appropriate cultural lens have formed an important backdrop for my study, against which I have explored my participants’ views on ‘Indigenous money’, financial capability and well-being.

Tying it together – understanding financial capability and well-being

Placing the wicked problem of financial exclusion within the human development and capability approach, shows that greater participation in economic life via enhancing financial capabilities, should maximize well-being, life chances, and enable people to lead fulfilling financial lives. A society which wants to achieve greater inclusion should focus on

developing people’s internal ‘capabilities’ as well as enable their ability to act, by providing external opportunities via political, social, economic and governance ‘freedoms’. In short, financial well-being can result when individuals develop their own financial understanding, knowledge, attitudes, skills as well as gain access to external freedoms such as health, education, employment, appropriate financial policies, instruments and services (Johnson & Sherraden 2007), as per the diagram below:

PhD Thesis 35

Vinita Godinho

Graduate School of Business & Law

Diagram 2: Linking financial well-being, financial functionings, financial capabilities &