This paper presents an integration of the normative approach of Dalton- Atkinson-Sen to inequality measurement and the positive approach related to the statistical dispersion of the family of generalized entropy indexes. Given a social valuation formula that expresses the aggregate social value as a weighted sum of individual incomes, where the weights represent the marginal social value of the individuals in society, our approach selects a particular inequality index, the original Theil (1967) index, T, Imposing a minimal set of reasonable conditions on the social valuation formula. Finally an empirical exercise based on the Household Budget Surveys shows how improvements in the income distribution have contributed to an increase in welfare beyond the observed increase in per capita income.

Key words: Inequality, Income Distribution, Welfare, Household Budget Surveys.
JEL classification: D31