From resources to functioning: Rethinking and measuring conversion rates

The scope of this chapter is twofold: on the one hand, we critically revise the existing literature on the estimation of the conversion process, with a specific focus on the concept of conversion rate, which has been often imprecisely defined and estimated; on the other hand, we propose a new improved conceptual framework in which we highlight the different role of conversion factors and conversion rates in estimating the functioning production function. Based on the theoretical discussion, we provide a guideline of the potential empirical strategy in which we discuss its strengths and challenges. Both the theoretical and the methodological discussions rely on the importance of their policy implications. The policy implication of estimating conversion rates can be substantial if they allow policy makers to effectively target public resources to groups of individuals with different assets and needs.