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Efficiency

EFFICIENCY


Efficiency, or allocative efficiency, is a central concept of economic theory. If one plan produced a product with fewer resources than another plan, it is said to be more efficient. A system that produces maximum output from minimum input of resources is efficient. Resources, including natural resources from the earth, labor, and technology, are considered finite or limited. To reach technical efficiency, they must be allocated or distributed so that the best use of available resources is made without waste, undue effort, or cost. Technical efficiency must result in the consumers' wants being satisfied within their economic purchasing power.

Increased efficiency is closely tied to improvement in technology. When a business adopts a new technology or improved plan of production to produce more of a product with fewer resources yet maintains the product's quality, then an efficient change has been made. A classic example occurred in the early 1900s when Henry Ford (18631947) developed a new method for producing cars, the assembly line. Rather than a group of workers making a complete car one at a time, each worker performed one task and cars were mass produced. This approach greatly reduced the time and cost needed to make a car. Resources saved would ideally be used in other areas.

In a perfectly efficient economic system resources are allocated into their highest-valued uses as evidenced by consumers' willingness to pay for the final product. While furniture or flooring made of oak garners a high price, no one would pay extra for shipping pallets or matchsticks made of oak. In a free market economy as in the United States the forces of supply and demand guide resources to their most efficient uses. In other words profits signal moves in resources to their highest valued use. A central government allocates resources in a command or planned economy as in the former Soviet Union.

See also: Assembly Line, Mass Production, Productivity

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efficiency

efficiency There are conflicting notions of efficiency in everyday work-life. Technical efficiency is relatively straightforward, and describes the relation of various energy inputs into equipment, in relation to output (though it may be difficult or meaningless to measure the latter). But there is no necessary reason why a technical optimum should coincide with maximum economic efficiency. Perfectly functioning equipment may well be closed down for financial reasons. The efficient use of human beings often crosscuts both, whether one is dealing with optimum use of physiological effort; psychological well-being (such as avoidance of stress) which may be vital to long-run as opposed to short-run task performance; or organizational and social efficiency, such as avoiding waste of human capital through unemployment or structural dislocation. Quite apart from these conflicting meanings, the notion of efficiency also raises questions of underlying and perhaps irreconcilable values about what ultimately contributes to individual and social welfare.

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efficiency

efficiency Work a machine does (output) divided by the amount of work put in (input). It is usually expressed as a percentage. In mechanical systems there are energy losses, such as those caused by friction. Output never equals input, and efficiency is always less than 100%. A machine with an efficiency of 100% would be capable of perpetual motion. For simple machines, efficiency can be defined as the force ratio (mechanical advantage) divided by the distance ratio (velocity ratio).

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efficiency

ef·fi·cien·cy / iˈfishənsē/ • n. (pl. -cies) the state or quality of being efficient: greater energy efficiency. ∎  an action designed to achieve this: to increase efficiencies and improve earnings. ∎  technical the ratio of the useful work performed by a machine or in a process to the total energy expended or heat taken in. ∎ short for efficiency apartment.

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efficiency

efficiency:1 In business and industry, see industrial management; productivity. 2 In physics, seemachine; work.

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efficiency

efficiencyChrissie, Cissy, kissy, missy, prissy, sissy •dixie, pixie, tricksy, Trixie •chintzy, De Quincey, wincey •efficiency, proficiency, sufficiency •Gypsy, tipsy •ditzy, glitzy, itsy-bitsy, Mitzi, ritzy, Uffizi •Eurydice •odyssey, theodicy •sub judice • prophecy • anglice •chaplaincy • policy • baronetcy •governessy • Pharisee • actressy •clerisy, heresy •secrecy • statice • captaincy •courtesy •dicey, icy, pricey, spicy, vice •stridency • sightsee •bossy, Flossie, flossy, glossy, mossy, posse •boxy, doxy, epoxy, foxy, moxie, poxy, proxy •bonxie •poncey, sonsy •dropsy, popsy •biopsy • heterodoxy • orthodoxy •autopsy

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Efficiency

EFFICIENCY

In the fields of technological innovation, economic development, business management, and public policy planning, as well as in everyday life, efficiency is a pivotal criterion that guides the behavior of both individuals and institutions. The widespread utilization of this criterion, however, raises serious epistemological, methodological, and practical questions, along with ethical challenges. Although efficiency may seem to be a clear, morally neutral concept, difficulties arise in conjunction with its extremely abstract character, the vast array of interpretations involved in concrete applications, and the fact that its pursuit may crowd out or obscure other important values.

Origins and Abstractions

The term efficiency is derived from the Latin efficere ("to produce, effect, or make"). In his Physics, Aristotle sees causa efficiens as one of the four factors (along with formal, material, and final causation) that explain change. Traditionally, efficiency has been understood as the agency or power of something or someone to bring about results, to produce a desired effect. In this sense there was no clear distinction between efficiency, effectiveness, and efficacy until the second half of the nineteenth century, when the term was given a technical meaning in the field of engineering.

The contemporary technical concept of efficiency arose from analyses of engine performance, or what is known as thermodynamic efficiency. The performance of an engine was defined as a ratio of the useful work obtained to the energy (heat) used. At best, the maximal amount of energy obtained would be the same as the energy consumed in the process. The concept then was used in economic theory, disseminated through the work of an engineer turned social scientist, Vilfredo Pareto (1848–1923), and other influential economists and engineers (Mitcham 1994). Economists saw themselves as engineers who were managing the scarce resources devoted to promoting social welfare, just as engineers attempted to find economic solutions to technological problems. The concept of efficiency moved into the political and public domains during the twentieth century, becoming a universally applied value. In the twenty-first century it is widely accepted that to be effective—that is, to obtain the intended goals—is not enough. It is also necessary to be efficient, that is, to obtain the intended results without wasting resources.

There are several definitions of the concept in its widest scope. The most common usages define efficiency as a ratio of results to resources or, alternatively, of ends to means or outputs to inputs. An activity, process, design, or system is said to reach maximum efficiency if (1) a desired result (output) is obtained through the use of the minimal possible amount of resources (input), (2) the maximal amount of results from a given resource is obtained, or in general (3) a combination of results and resources is obtained in such a way that it is not possible to increase any of the results or reduce any of the resources without reducing some other result (or amount of a result) or increasing some other resource (or amount of a resource).

Multiple Meanings

In its various usages the concept of efficiency gives rise to multiple meanings when this abstract idea is given specific applications: technical efficiency, energy efficiency, economic efficiency, resource efficiency, productive efficiency, market efficiency, and ecological efficiency, among others. Imprecise use, lack of agreement among experts, different backgrounds of expertise and technical traditions, hidden assumptions, the mathematical and practical complexities involved in making measurements, and other factors often make it extremely difficult to know the extent to which these terms should be taken as mere delimitations of a more general concept or, rather, suggest different but related concepts. The situation becomes more complicated when one considers the wide array of uses of the concept in heterogeneous fields such as energy technology, agriculture, health care, business management, public administration, and academic or personal performance. As a consequence, there is a huge technical literature dealing with these problems. Philosophical analyses that do not take the definition of efficiency for granted are uncommon, although there are exceptions, such as the work of Mario Bunge (1989), Stanley Carpenter (1983), Miguel Angel Quintanilla (1989), and Henryk Skolimowski (1966).

Initially it seems easy to distinguish between purely technological or engineering and economic conceptualizations. The engineering solution to a problem is efficient when it uses the smallest amount of technological means independently of economic constraints. In real-life situations, however, technological means often must be measured in economic terms. For instance, although it is technically feasible to obtain gold from other elements, the cost of the procedure is so high compared with the value of the results that any attempt would be inefficient because of the excessive resources that must be used to achieve the objective.

Even in economics assessments generally are not equivalent. Narrowly productive points of view and the quest for personal profit repeatedly conflict with efficiency requirements in terms of social welfare. To harmonize legitimate aspirations with both personal gain and social benefit, economists, acting in effect as political assessors, resort to cost-benefit analyses that are supposed to identify a so-called Pareto optimum, which is defined as that situation in which it is not possible through any reallocation of resources to make any person better off without making someone else worse off without compensation.

Critics such as Amartya Sen (2002) have exposed the weaknesses in this conception and attempted to find more rigorous and fair alternatives. Because it does not take into account the problems associated with the fair distribution of public spending, the application of the Pareto optimum maintains unjust situations. Suppose there is a fixed public spending budget of $100 to be distributed between education and airport infrastructure. If the education budget is increased by $10 to make it easier for the poorest members of society to attend university on scholarship, that amount must be subtracted from the budget to improve airport infrastructure. Therefore, some benefit at the expense of others. The Pareto optimum no longer is reached because it would advise against any change in the assigned budgets. However, it would be difficult to defend denying scholarships to qualified students so that people who can afford a good education can reach their favorite vacation spots more easily.

Because efficiency is essentially context-dependent, many of the problems that arise in discussing it are caused by attempts to decide what counts as a resource or result and what is considered valuable, desirable, feasible, or even possible (Carpenter 1983, de Cózar 2000). Efficiency is not determined by preexisting conditions but is constructed by deciding which factors to consider in defining the problem and frequently by actively modifying the physical, economic, and legal environment in which an intervention is made to change the state of things. Geographical limits, the temporal vector, side effects, and other elements further frame the context of an intervention.

Aware of the practical problems raised by seeking the most efficient solution, or optimization, Herbert Simon (1982) proposed the concept of satisficing: the attempt to achieve a good, if not perfect, solution. A large telecommunications company may decide not to develop a radically new system of communication even though it is faster, more powerful, and easier to use if it has no clear estimation of the cost of gathering the information required to predict the success of the new technology in the market. This cost, together with the cost of research and development, can surpass the profits the innovation is projected to generate for the company. In other words, the company would be content with satisficing its behavior by making less ambitious improvements. Alternatively, a company might gamble on this major innovation if it were confident in its ability to influence, among other aspects of its social environment, public regulations and the perceived needs of the consumers.

Obscuring Other Values

Contextuality is a key issue in understanding the conflict between the modern technological project and the criticisms leveled at it by many philosophers of technology. The technological impulse is tied intimately to the design of increasingly more efficient machines, devices, tools, systems, and processes. In the course of this activity, which has contributed much to humanity in terms of safety, health, and welfare, the technological mind typically delimits problems in the narrowest possible way and then searches for basically quantitative solutions. Its success depends on this strategy, and much of the attraction of efficiency for experts and nonexperts alike lies in the perception that it always provides (as it really does in some cases) a mathematical, automatic comparison between alternatives that can be used to determine the best path to follow.

In this manner a descriptive concept becomes a prescriptive one. Arguments for efficiency appear to derive prescriptions from a dispassionate description of objects and situations, thus hiding the often conflicting values that lie behind decision making in real-world situations. For instance, Amory Lovins (1977) has argued in effect that proposals to build more efficient power plants ignore the possible desirability of reducing energy consumption by increasing the insulation of buildings.

It is important to remember that despite its familiarity, the concern for efficiency is relatively recent. The novelty of the current situation is that efficiency is being converted into an absolute criterion for decisions in many facets of life. As Jacques Ellul (1954) observed, if modern technological activity becomes indistinguishable from the pursuit of absolute efficiency, an ethics of nonpower is also conceivable. Such an ethics can, and indeed must, pose a limit to the cult of efficiency and its abuses. As Carl Mitcham suggests, there is a parallel between the well-known naturalistic fallacy and an efficiency fallacy. The philosopher David Hume (1711–1776) argued that ought-statements cannot be inferred from is-statements, and G. E. Moore (1873–1958) warned against equating goodness with some natural property. In regard to something that is said to be natural, with the implication that it is good, one may still reasonably ask, But is it good? Similarly, after one says that something is efficient, it makes sense to ask, But is it good? Twentieth-century history exhibits a long list of cases in which unethical goals were pursued with bloodcurdling efficiency. Therefore, one should define the goals one judges as good and only then, if appropriate, look for the means to achieve them efficiently.

JOSÉ MANUEL DE CÓZAR-ESCALANTE

SEE ALSO Critical Social Theory; Economics and Ethics; Neutrality in Science and Technology; Pareto, Vilfredo; Taylor, Frederick W.; Work.

BIBLIOGRAPHY

Bunge, Mario. (1989). Treatise on Basic Philosophy. Vol. 8. Dordrecht, Netherlands: Reidel. Bunge's extensive work contains one of the first attempts at dealing with efficiency as a key concept to consider in philosophy of technology but his approach remains too close to the neopositivistic paradigm.

Carpenter, Stanley R. (1983). "Alternative Technology and the Norm of Efficiency." Research in Philosophy and Technology 6: 65–76. A pioneer paper that contributes to the clarity and precision of discussions on technological practice that invoke efficiency, while at the same time adopting a critical stance on the abuse of this criterion.

De Cózar-Escalante, José Manuel. (2000). "Toward a Philosophical Analysis of Efficiency." Research in Philosophy and Technology 19: 87–100. This essay identifies two problems of the concept of efficiency (unicity and applicability) and argues for a critical reconsideration of efficiency in social life.

Ellul, Jacques. (1954). La Technique, ou l'enjea du siècle. Paris: A. Colin. Trans. by John Wilkinson as The Technological Society (1964). New York: Knopf. In this book Ellul defines technique as the totality of methods rationally arrived at and having absolute efficiency (for a given stage of development) in every field of human activity. One of the main aims of Ellul's work is to denounce the fixed end of technological design and activity, by which the multiplicity of means and ends are reduced to only one: the most efficient.

Mitcham, Carl. (1994). Thinking through Technology: The Path between Engineering and Philosophy. Chicago: University of Chicago Press. In his comprehensive revision of the most important analyses of the technological phenomenon, Mitcham includes useful information as well as insightful remarks about the meaning of efficiency in technological design and everyday life.

Quintanilla, Miguel Angel. (1989). Tecnología: Un enfoque filosófico [Technology: A philosophical approach]. Madrid: Fundesco. In a brief section of this book the author works out a formal definition of efficiency as a basis upon which to further distinguish other technological criteria.

Sen, Amartya. (2002). Rationality and Freedom. Cambridge, MA: Belknap Press. The reputed economist Amartya Sen is known, among other contributions to economic, social and ethical theory, for his sharp criticism of standard models of rational behaviour. Being reductionist and ill-conceived, those models tend to obscure crucial aspects of an individual's choice in real life situations.

Simon, Herbert A. (1982). Models of Bounded Rationality. Cambridge, MA: MIT Press. During his long career, Simon did impressive work to establish the strength and limits of rational design and management. One of his more interesting findings was the concept of bounded rationality: even if often is not realistic to search for the most efficient solution in absolute terms, a solution that is good enough can be achieved within the bounds set by the specific context in which the problem is stated.

Skolimowski, Henryk. (1966). "The Structure of Thinking in Technology." Technology and Culture 7(3): 371–383. Reprinted in Philosophy and Technology: Readings in the Philosophical Problems of Technology (1972), ed. Carl Mitcham and Robert Mackey. New York: Free Press. An early attempt at philosophically clarifying the concept of efficiency and its role as an ideal in engineering. However, Skolimowski's analysis has some weaknesses, especially because it does not clearly distinguish efficiency from effectiveness.

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