Hugh Dalton - Contributions in Economics

Contributions in Economics

Dalton substantially expanded Max Otto Lorenz's work in the measurement of income inequality, offering both an expanded array of techniques but also a set of principles by which to comprehend shifts in an income distribution, thereby providing a more compelling theoretical basis for understanding relationships between incomes (1920). Following a suggestion by Pigou (1912, p. 24), Dalton proposed the condition that a transfer of income from a richer to a poorer person, so long as that transfer does not reverse the ranking of the two, will result in greater equity (Dalton, p. 351). This principle has come to be known as the Pigou–Dalton principle (see, e.g., Amartya Sen, 1973). Dalton offered a theoretical proposition of a positive functional relationship between income and economic welfare, stating that economic welfare increases at an exponentially decreasing rate with increased income, leading to the conclusion that maximum social welfare is achievable only when all incomes are equal (Rogers, 2004).