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A measure of income inequality within a population, ranging from 0 (perfect equality) to 1 (perfect inequality). Reducing the Gini Coefficient can be seen as promoting social welfare by creating a more equitable society.

Goods and services that the government feels consumers will under-consume, and which ought to be subsidized or provided free at the point of use. They have positive external effects that can improve social welfare if consumed in the right quantities.

A function that ranks different economic states or allocations based on their social desirability, often factoring in considerations such as equity and efficiency. It is used to assess the collective well-being of a society.

A loss of economic efficiency that can occur when the free market equilibrium for a good or a service is not achieved. Deadweight loss represents the lost welfare that could have been gained from a more efficient allocation of resources.

A term that describes the action taken together by a group of people whose goal is to enhance their status and achieve a common objective. Public economics analyzes how to best organize collective action to deliver public goods and services, which in turn can enhance social welfare.

A type of good for which demand increases as the price increases, in direct contradiction of the law of demand, often because such goods function as a status symbol. Though not directly related to social welfare, understanding their consumption can shed light on socioeconomic disparities.

A tax imposed on activities that generate negative externalities to correct the market outcome. It aligns the private cost with the social cost of a good, leading to a more socially optimal level of production and consumption.

A cost or benefit for a third party who did not agree to it caused by an economic transaction. Externalities can be negative or positive and can lead to suboptimal allocation of resources if not properly addressed, affecting social welfare.

A graphical representation of income or wealth distribution within an economy. It shows the proportion of total income earned by various portions of the population. Policies that flatten the Lorenz Curve generally indicate a more equitable distribution and can enhance social welfare.

Situations where government intervention causes a more inefficient allocation of goods and resources than would occur without that intervention, potentially harming social welfare.

A situation in which one party in a transaction has more or superior information compared to the other. This can cause market inefficiencies and result in market failures, such as adverse selection and moral hazard, affecting social welfare.

A situation in a shared-resource system where individual users acting independently according to their own self-interest behave contrary to the common good of all users by depleting or spoiling the shared resource. Addressing this can improve social welfare through better resource management.

A situation in which the market does not allocate resources efficiently on its own, leading to a loss of economic welfare. Market failure can justify government intervention to achieve a better distribution of resources and improve social welfare.

Goods that are non-excludable and non-rivalrous, meaning an individual cannot be prevented from using them and one person's use does not reduce another's. Public goods often require government provision to ensure they are supplied since the free market may underprovide them, impacting social welfare.

A field of economics that analyzes the behavior of politicians and government officials as largely self-interested and applies economic thinking to political decision-making. It examines how these behaviors can affect the allocation of resources and thus social welfare.

A situation where a party is more likely to take risks because the negative consequences of the risk will be felt by another party. For example, when someone takes greater risks because they have insurance. Addressing moral hazard can improve contracts and reduce costs, potentially benefiting social welfare.

A branch of economics that explores the design of a tax system that maximizes social welfare, taking into account both equity and efficiency concerns. It involves balancing revenue generation with minimizing the economic distortions caused by taxation.

A market process wherein undesired results occur when buyers and sellers have asymmetrical information. The party with less information is at a disadvantage to the party with more information. Managing adverse selection can be important for improving market outcomes and social welfare.

A situation where some individuals consume a good without paying for it, leading to underproduction or underfunding of the good, as seen with public goods. It can diminish social welfare because the good may not be available at the optimal quantity or quality.

The transfer of income and wealth from some individuals to others by means of a social mechanism such as taxation, charitable donations, or welfare. Its aim is often to improve equity in the distribution of income, thereby enhancing social welfare.

A tax system in which the tax rate increases as the taxable amount increases. Progressive taxation is used to distribute income more evenly across society, potentially enhancing social welfare.

A process used to evaluate the total expected costs versus benefits of a particular project or decision, to determine its feasibility or compare alternatives. Cost-benefit analysis aids in ensuring that resources are allocated to projects that enhance social welfare.

A conflict in prioritization that occurs when one person or entity (the agent) is able to make decisions and/or take actions on behalf of another person or entity (the principal). Solving principal-agent problems can lead to better alignment of incentives and improve social welfare.