Efficiency

Richard O. Zerbe Jr.

Efficiency is largely but not exclusively an economic concept. When one thinks of efficiency generally, one thinks of obtaining a result with the least possible amount of resources. This meets part, but only part, of the criterion for economic efficiency. Economic efficiency is also concerned with the choice of the desired result or goal. It involves getting what people most desire from the available resources. The most basic concept of economic efficiency is that of Pareto efficiency, named for the great Italian economist Vilfredo Pareto (1848–1923). Pareto efficiency is achieved as long as it is not possible to make a change that makes someone better off without making anyone else worse off. There is both a strong and a weak form of Pareto efficiency. In its strong from, Pareto efficiency requires that some state of the world, A, is preferable to state B when state A is ranked higher than ...

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