The global economic crisis that began in 2007 affected the lives of many people in the UK. Most existing research into the effects of 'the Great Recession' on well-being takes an economic or subjective approach to assessing the impacts of hard times. This thesis takes an alternative perspective: the Capabilities Approach (CA) is used to assess the effects of economic crisis on people's freedom to lead flourishing lives. The study develops a theoretical framework that combines the CA with concepts from Philosophy and Social Psychology - the theories of practical reason and personal values. These concepts are then operationalised using data from the European Social Survey and quantitative methods, including latent variable techniques and structural equation models. The study reveals that economic crisis had a two-fold effect on well-being, resulting in (1) reduced opportunities to achieve valuable outcomes and (2) diminished expectations, aspirations and goals. These effects were concentrated among socio-economically vulnerable groups, including those on low incomes and the long-term sick and disabled: the findings show that economic crisis compounded existing socio-economic inequalities. The research makes three main contributions. First, it demonstrates theoretically and empirically that subjective well-being is not a reliable indicator for evaluating the effects of hard times on well-being; nor is it, more generally, a suitable guide for public policy. Second, it demonstrates a new methodological approach to identifying latent 'value orientations' within Schwartz's framework of personal values. Third, in combining the CA with theories of practical reason and personal values, this research offers a new approach to conceptualising and measuring the agency aspect of capability.