 The study of inequality and poverty indices started from a statistical, pragmatic perspective, with such indices as the Gini index of inequality or the poverty head count. Recent research has provided two valuable insights. First, it is possible to relate inequality indices to social welfare functions, so as to give inequality indices a more transparent ethical content. The idea is that an inequality index should not simply measure dispersion in a descriptive way, but would gain in relevance if it measured the harm to social welfare done by inequality. There is a simple method to derive an inequality index from a social welfare function, due to Kolm (1969) and popularized by Atkinson (1970) and Sen (1973). Consider a social welfare function which is defined on distributions of income and is symmetrical (i.e., permuting the income of two individuals leaves social welfare unchanged). For any given unequal distribution of income, one may compute the egalitarian distribution of income which would yield the same social welfare as the unequal distribution. This is called the “equally-distributed equivalent” (or “equal-equivalent”) distribution. If the social welfare function is averse to inequality, the total amount of income in the equal-equivalent distribution is less than in the unequal distribution. In other words, the social welfare function condones some sacrifice of total income in order to reach equality. This drop in income, measured in proportion of the initial total income, may serve as a valuable index of inequality. This index may also be used in a picturesque decomposition of social welfare. Indeed, an ordinally equivalent measure of social welfare is then total income (or average income – it does not matter when the population is fixed) times one minus the inequality index.