Dynamic equivalence, also called functional equivalence, is an approach to Bible translation that prioritizes natural readability and understanding in the target language rather than literal accuracy to the original text. It has been summarized as thought-for-thought translation. Its opposite, formal equivalence, emphasizes word-for-word translation and preserving grammatical structures, thus giving a more literal translation. The approach of formal equivalence allows readers who are familiar with the original language to analyze the original text, highlighting finer shades of meaning and nuance. However, dynamic equivalence allows readers to understand the text in their own language by removing idioms and rearranging words for a more natural flow in the target language. Dynamic equivalence concerns itself with communicating the basic message of the passage by using modern language and expression whereas formal equivalence concerns itself with preserving the original text as literally as possible. Both approaches to Bible translation endeavor to faithfully render the original text into the target language.
One way to think about these varying approaches is to consider this example. In the Eastern United States, carbonated drinks are called "soda," but in the Midwestern United States, they're referred to as "pop." So if a customer from the East Coast were to visit the Midwest and request a "soda," that would be similar to formal equivalence. However, if that customer were to change his request and ask for a "pop," that would be similar to dynamic equivalence. The words mean the same thing, but sound more natural to the hearer when the customer chooses a word more common to the hearer's community. Formal equivalence gives preference to the speaker's phraseology and dynamic equivalence gives preference to the hearer's vocabulary.
Because languages contain concepts and words for which there exist no direct equivalents in other languages, even formal equivalence must use a dynamic approach in such cases. The English word love is a good example. In Hebrew there are two different words for "love" and in Greek there are four. Those six words have different nuance and meaning without a direct equivalent in English. Therefore, translators have added modifiers to try to communicate the differing concepts like "steadfast love" for the Hebrew chesed or "brotherly love" for the Greek philadephia.
In Bible translation there is a range of how much dynamic as compared to formal equivalence translators use to render different translations. In English, the King James Version (KJV) and the American Standard Version (ASV) are considered formal equivalence translations and the New Living Translation (NLT) and the New International Readers Version (NIrV) are dynamic equivalence translations. There are also translations that use a combined approach that fall along the middle of that range sometimes called "optimal equivalence." The New American Standard Bible (NASB) and the English Standard Version (ESV) lean more toward formal equivalence while the New International Version (NIV) and Holman Christian Standard Bible (HCSB) use more of the dynamic equivalence approach, but all four of those translations are less extreme than the King James Version on the one end and the New Living Translation on the other.
Each translation approach has its strengths and pitfalls. Literal translations make the original language more transparent but can sound awkward to the modern ear and often require clarification and explanation to sift through cultural customs, idioms, and grammatical dissimilarities. Dynamic translations are easier for modern readers to understand, but may lose some of the elements of the ancient text like word plays, cultural practices, and figures of speech. Dynamic equivalence also leads to interpretive decisions that might miss the point of the original text or only convey part of the original message. Thus, a wise approach to studying the Bible would be to use a mix of several different translations. Use a translation with the dynamic equivalence approach to understand the basic message of the text and what that might mean for living in today's world. Then use a translation with the formal equivalence approach to conduct word studies and discover what the passage meant for its original audience in ancient times and how that may change your understanding of the passage and what it means for you today.
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