Talk:Economic efficiency

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 Definition Ratio of the quantity of some measure of output to the quantity of input required to bring it about. [d] [e]
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Some misgivings

I have drafted this in terms that were once familiar to me (a very long time ago!) but I see that many current text books and encylopedias ignore the concept of efficiency altogether, and others either define its components in a variety of different ways, or lump them all together in one portmanto definition. That has me worrying whether this article is useful. It is highly conceptual and does not seem to have a great deal of practical application. The main uses to which I have put it to are:

  • (a) to draw the distinction between allocative efficiency (which removing barriers to competition should increase) and productive efficiency (which the same action can sometimes diminish); and,
  • (b) to set the scene for, and provide a space-saving link from, the unwritten article on cost/benefit analysis.

But it is arguably a heavy-handed way of doing either.

Advice, please! Nick Gardner 10:23, 11 November 2007 (CST)

The article is analytically useful, so there is no problem with that. I suppose the question we need to ask is: will the reader look for the topic of economic efficiency? If Yes,. then there is no problem. If we suspect not, then it should be subsumed within another article or two. --Martin Baldwin-Edwards 12:06, 11 November 2007 (CST)
I think that economic efficiency is useful as a standalone article. Even if people don't search for it on its own, I can see it being linked to from other articles, in fact, I was pleasantly surprised to find it when working on the welfare economics entry. Stephen Saletta 22:27, 11 November 2007 (CST)
I have decided to continue in order to provide readers of articles on cost/benefit analysis and competition policy access to their theoretical underpinning - and its limitations - without a textual digression, and without having to go through much that would not be relevant in a full-blown article on welfare economics.

Nick Gardner 07:50, 13 November 2007 (CST)


Can anyone think of anything else that should be covered in this article? Nick Gardner 08:15, 15 November 2007 (CST)

I think this guy is looking good, one comment would be:
In principle, the economic efficiency of an action is taken refer to the ratio of the increase in social utility (or total consumer satisfaction) that it produces to the quantity of the community's resources that it requires. The difficulty about that definition is that the effect on social utility of actions that result in losses as well as gains cannot be assessed without making subjective judgments about the best distribution of income among individuals...
I think another "difficulty" that needs mentioning is that of making interpersonal utility comparisons. This is an easy read and not a bad way of putting things, but if it's going to stand as-is I think at least a link or aside about the fallacy of adding up interpersonal utility would be somewhat in order. Stephen Saletta 22:32, 17 April 2008 (CDT)

The questions of income distribution and interpersonal comparisons will be fully covered in the article on Welfare Economics (which at present is at a "work-in-progress" stage) and that article is referred to in the introduction by the sentence The concept of economic efficiency is a product of the theory of welfare economics and is subject to the limitations noted in the article on that topic. I see no reason to make more of those difficult and confusing issues in this article. Nick Gardner 11:34, 18 April 2008 (CDT)