The capabilities approach evaluates wellbeing by what people are actually able to do and be, their real freedoms, instead of by resources held, utility experienced or rights formally possessed.
Amartya Sen introduced it in a 1979 lecture by asking: equality of what? His answer was that the two leading candidates fail for the same reason. Resources ignore that people differ in what they can convert resources into. Utility adapts, so the chronically deprived often report satisfaction because they have adjusted their expectations downward. A disabled person and an able-bodied person with identical income do not have identical freedom, and a contented deprived person is not thereby well off. What matters is capability: the set of functionings genuinely available to a person.
Martha Nussbaum developed the approach philosophically and departed from Sen on its central open question. She specifies ten central capabilities, among them life, bodily health, bodily integrity, senses and imagination, emotions, practical reason, affiliation and control over one's environment, and argues that a theory which will not say which capabilities matter cannot ground constitutional entitlements. Sen declines to fix a list, holding that the selection belongs to democratic deliberation in each society. The disagreement is unresolved and is the liveliest argument inside the tradition.
Its practical influence is unusually concrete for a philosophical framework. The UN Human Development Index, built with Sen's involvement from 1990, reoriented development measurement away from income alone, and the approach has reshaped work on disability, gender and global justice. The standard objections are that capabilities resist measurement in ways income does not, and that the framework identifies what to value without saying how the values should be traded off when they conflict.