Axiom of Monotonicity and Axiom of Transfers

The terms axiom of monotonicity and axiom of transfers were coined in 1976 by Amartya Sen, an Indian economist best known for his contributions to welfare economics. Prior to 1976, the primary index used to measure poverty was a simple headcount ratio, which basically measured the number of poor people in any given population compared to the total number of people in that population. Sen found this measure to be somewhat lacking as it did not allow for changes in income below the poverty line or transfers of income from the poor to the rich.

Two differing axioms were devised as a result: The axiom of monotonicity asserts that as long as all else remains constant, a reduction in income of a person below the poverty ...