Studying income differences

Around 1970, Serge Kolm, Anthony Atkinson and - somewhat later - Amartya Sen clarified the relation between the so-called Lorentz curve (that describes the income distribution), the so-called Gini coefficient (that measures the degree of income inequality), and society's ordering of different income distributions. One application of this work is overcoming the problem when comparing the welfare of different societies, namely that many commonly used indicators, such as income per capita, only take average conditions into account. Sen has developed alternatives, which also encompass the income distribution.