Buddha addressed this issue in one of the Suttas, Chula-Kammavibhanga Sutta (Majjhima Nikaya).

This Sutta was delivered in response to a question asked by Subha, one of the students.  One day when Buddha, was staying at the Anathapindika’s monastery in Jethavana, near Savatthi, Subha approached the blessed one and asked “Master  Gothama, why no two human beings are alike? Why some people are short lived, and others long lived, some sickly and others healthy, some beautiful, and others ugly, some influential and others non-influential, some rich and others poor, some stupid and others discerning so on and so forth?”

Blessed one answered, Subha, beings are the owners of their own actions, born out of their actions, related through their actions, and have action as their arbitrator.  Action is what determines and differentiates beings in terms of their processions, character and the qualities they inherit.

Buddha, further elaborated this statement by taking examples.  For example a person who kills living beings, shows no mercy to living beings will be born in a lower realm after death, if he happened to be born as a human being, he will have a short life. One who abandons killing and have sympathy for the welfare of the living beings, will be reborn in a higher realm, and if he happens to be born as a human being will inherit long life.

In a similar fashion: 
One who harms others by hurting, injuring, physical abuse if born as a human being will be born as a sickly person, and one who avoids from such deeds will be born a healthy person.

One who has a bad temper, easily provoked, will be born with an ugly figure, and the person with good temper, not easily offended, and not malicious will be born with a pleasant disposition.

One who is envious of others fortune, does not honor, or respect others, when reborn as a human being, will not gain any prominence and has no good personality.  The one who is not envious, will be prominent wherever reborn.

One who is not a giver of food, drinks, clothes, etc. (not generous) will be born a poor person, and the one who is generous, gives away food, clothing, and other amenities to deserving people will be wealthy wherever he or she is reborn.

One who is arrogant and doesn’t pay respect to those deserving homage will be low-born and the one who is not obstinate and not arrogant will be high-born wherever reborn.

One who does not consult wise about the things that should and shouldn’t be done will be born stupid, and the one who consults what is skilful, what is blameworthy, will be discerning wherever he is reborn.

Therefore, people are owners of their actions, heirs of their actions, born of their actions, related through their actions, and have actions as their arbitrator. Action is what determines beings in terms of character and excellence.

Other issues discussed: 

Different temperaments of beings