In this paper we utilize the Data Envelopment Analysis (DEA), a non-parametric method, to estimate measures of technical efficiency of the Brazilian states in the generation of welfare between 1986 and 1998. The basic welfare measures considered include the measure developed by Sen and, alternatively, GDP per capita and the Human Development Index (HDI). Additionally, Theil's inter and intra-regional income inequality measures are calculated so that the path of income inequality as a determinant of welfare could also be analyzed for Brazil. Comparing these inequality measures in the beginning and in the end of the period in analysis, we note that only in the Northeast and in the Southeast was that inequality was significantly reduced. And, regarding the measures of efficiency in the generation of welfare, the model using Sen's measures or GDP per capita indicate that the states of São Paulo, Rio Grande do Sul, Amazonas, Roraima, and Amapá are the most efficient among all Brazilian states. When the HDI is considered, the same states are the most efficient with the exception of São Paulo.
