A capabilities approach to austainable household livelihoods1With thanks to the Economic and Social Research Council for funding ‘Enterprising livelihoods in rural households: new and old ways of working’ Award number R000238213 on which the empirical work is based.

The aim of this article is to build a framework with which to compare the reality of household livelihoods and the models put forward by economists and policy makers. It applies Sen's framework of human flourishing to a real world situation with a view to developing the understanding of the relationships between household livelihoods and individual well being. In undertaking this, it contributes to the advancement of the capability approach. The article explores the institutional elements that embed individuals in the wider social relations of household, gender and economy in order to clarify the links between household endowments and individual flourishing. It tests and explores this framework through application to an analysis of microbusiness households in the rural north of England, where insecurity is almost invariably associated with running a business. The conclusions argue that it is impossible to understand the microbusiness enterprise as separate from the household within which it is located, and discuss the implications of this analysis for policy making.