Efficiency
   HOME

TheInfoList



OR:

Efficiency is the often measurable ability to avoid wasting
material Material is a substance or mixture of substances that constitutes an object. Materials can be pure or impure, living or non-living matter. Materials can be classified on the basis of their physical and chemical properties, or on their geologi ...
s, energy, efforts, money, and time in doing something or in producing a desired result. In a more general sense, it is the ability to do things well, successfully, and without waste. In more mathematical or scientific terms, it signifies the level of performance that uses the least amount of inputs to achieve the highest amount of output. It often specifically comprises the capability of a specific application of effort to produce a specific outcome with a minimum amount or quantity of waste, expense, or unnecessary effort. Efficiency refers to very different inputs and outputs in different fields and industries. In 2019, the
European Commission The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body o ...
said: "Resource efficiency means using the Earth's limited resources in a sustainable manner while minimising impacts on the environment. It allows us to create more with less and to deliver greater value with less input." Writer Deborah Stone notes that efficiency is "not a goal in itself. It is not something we want for its own sake, but rather because it helps us attain more of the things we value."


Efficiency and effectiveness

Efficiency is very often confused with
effectiveness Effectiveness is the capability of producing a desired result or the ability to produce desired output. When something is deemed effective, it means it has an intended or expected outcome, or produces a deep, vivid impression. Etymology The ori ...
. In general, efficiency is a measurable concept, quantitatively determined by the
ratio In mathematics, a ratio shows how many times one number contains another. For example, if there are eight oranges and six lemons in a bowl of fruit, then the ratio of oranges to lemons is eight to six (that is, 8:6, which is equivalent to the ...
of useful output to total useful input. Effectiveness is the simpler concept of being able to achieve a desired result, which can be expressed quantitatively but does not usually require more complicated mathematics than addition. Efficiency can often be expressed as a percentage of the result that could ideally be expected, for example if no energy were lost due to friction or other causes, in which case 100% of fuel or other input would be used to produce the desired result. In some cases efficiency can be indirectly quantified with a non-percentage value, e.g.
specific impulse Specific impulse (usually abbreviated ) is a measure of how efficiently a reaction mass engine (a rocket using propellant or a jet engine using fuel) creates thrust. For engines whose reaction mass is only the fuel they carry, specific impulse i ...
. A common but confusing way of distinguishing between efficiency and effectiveness is the saying "Efficiency is doing things right, while effectiveness is doing the right things". This saying indirectly emphasizes that the selection of objectives of a production process is just as important as the quality of that process. This saying popular in business, however, obscures the more common sense of "effectiveness", which would/should produce the following mnemonic: "Efficiency is doing things right; effectiveness is getting things done". This makes it clear that effectiveness, for example large production numbers, can also be achieved through inefficient processes if, for example, workers are willing or used to working longer hours or with greater physical effort than in other companies or countries or if they can be forced to do so. Similarly, a company can achieve effectiveness, for example large production numbers, through inefficient processes if it can afford to use more energy per product, for example if energy prices or labor costs or both are lower than for its competitors.


Inefficiency

Inefficiency is the absence of efficiency. Kinds of inefficieny include: * Allocative inefficiency refers to a situation in which the distribution of resources between alternatives does not fit with consumer taste (perceptions of costs and benefits). For example, a company may have the lowest costs in "productive" terms, but the result may be inefficient in allocative terms because the "true" or
social cost Social cost in neoclassical economics is the sum of the private costs resulting from a transaction and the costs imposed on the consumers as a consequence of being exposed to the transaction for which they are not compensated or charged. In other w ...
exceeds the price that consumers are willing to pay for an extra unit of the product. This is true, for example, if the firm produces pollution (see also
external cost In economics, an externality or external cost is an indirect cost or benefit to an uninvolved third party that arises as an effect of another party's (or parties') activity. Externalities can be considered as unpriced goods involved in either co ...
). Consumers would prefer that the firm and its competitors produce less of the product and charge a higher price, to internalize the external cost. * Distributive inefficiency refers to the inefficient distribution of income and wealth within a society. Decreasing marginal utilities of wealth, in theory, suggests that more egalitarian distributions of wealth are more efficient than inegalitarian distributions. Distributive inefficiency is often associated with
economic inequality There are wide varieties of economic inequality, most notably income inequality measured using the distribution of income (the amount of money people are paid) and wealth inequality measured using the distribution of wealth (the amount of we ...
. *
Economic inefficiency In microeconomics, economic efficiency, depending on the context, is usually one of the following two related concepts: * Allocative or Pareto efficiency: any changes made to assist one person would harm another. * Productive efficiency: no addit ...
refers to a situation where "we could be doing a better job," i.e., attaining our goals at lower cost. It is the opposite of economic efficiency. In the latter case, there is no way to do a better job, given the available resources and technology. Sometimes, this type of economic efficiency is referred to as the Koopmans efficiency. Sickles, R., & Zelenyuk, V. (2019). Measurement of Productivity and Efficiency: Theory and Practice. Cambridge: Cambridge University Press. doi:10.1017/9781139565981
/ref> *
Keynesian Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomic theories and models of how aggregate demand (total spending in the economy) strongly influences economic output an ...
inefficiency might be defined as incomplete use of resources (labor, capital goods, natural resources, etc.) because of inadequate
aggregate demand In macroeconomics, aggregate demand (AD) or domestic final demand (DFD) is the total demand for final goods and services in an economy at a given time. It is often called effective demand, though at other times this term is distinguished. This is ...
. We are not attaining
potential output In economics, potential output (also referred to as "natural gross domestic product") refers to the highest level of real gross domestic product (potential output) that can be sustained over the long term. Actual output happens in real life while ...
, while suffering from
cyclical unemployment Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employment but currently available for work during the refere ...
. We could do a better job if we applied
deficit spending Within the budgetary process, deficit spending is the amount by which spending exceeds revenue over a particular period of time, also called simply deficit, or budget deficit; the opposite of budget surplus. The term may be applied to the budget ...
or expansionary
monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often a ...
. * Pareto inefficiency is a situation in which one person can not be made better off without making anyone else worse off. In practice, this criterion is difficult to apply in a constantly changing world, so many emphasize Kaldor-Hicks efficiency and inefficiency: a situation is inefficient if someone can be made better off even after compensating those made worse off, regardless of whether the compensation actually occurs. * Productive inefficiency says that we could produce the given output at a lower cost—or could produce more output for a given cost. For example, a company that is inefficient will have higher operating costs and will be at a competitive disadvantage (or have lower profits than other firms in the market). See Sickles and Zelenyuk (2019, Chapter 3) for more extensive discussions. *Resource-market inefficiency refers to barriers that prevent full adjustment of resource markets, so that resources are either unused or misused. For example,
structural unemployment Structural unemployment is a form of involuntary unemployment caused by a mismatch between the skills that workers in the economy can offer, and the skills demanded of workers by employers (also known as the skills gap). Structural unemployment i ...
results from barriers of mobility in labor markets which prevent workers from moving to places and occupations where there are job vacancies. Thus, unemployed workers can co-exist with unfilled job vacancies. *
X-inefficiency X-inefficiency is the divergence of a firm’s observed behavior in practice, influenced by a lack of competitive pressure, from efficient behavior assumed or implied by economic theory. The concept of X-inefficiency was introduced by Harvey Leib ...
refers to inefficiency in the "black box" of production, connecting inputs to outputs. This type of inefficiency says that we could be organizing people or production processes more effectively. Often problems of "morale" or "
bureaucratic inertia Bureaucratic inertia is the supposed inevitable tendency of bureaucratic organizations to perpetuate the established procedures and modes, even if they are counterproductive and/or diametrically opposed to established organizational goals. This un ...
" cause X-inefficiency. Productive inefficiency, resource-market inefficiency, and X-inefficiency might be analyzed using
data envelopment analysis Data envelopment analysis (DEA) is a nonparametric method in operations research and economics for the estimation of production frontiers.Charnes et al (1978) DEA has been applied in a large range of fields including international banking, econom ...
and similar methods.


Mathematical expression

Efficiency is often measured as the ratio of useful output to total input, which can be expressed with the mathematical formula ''r''=''P''/''C'', where ''P'' is the amount of useful output ("product") produced per the amount ''C'' ("cost") of resources consumed. This may correspond to a percentage if products and
consumables Consumables (also known as consumable goods, non-durable goods, or soft goods) are goods that are intended to be consumed. People have, for example, always consumed food and water. Consumables are in contrast to durable goods. Disposable produc ...
are quantified in compatible units, and if consumables are transformed into products via a conservative process. For example, in the analysis of the
energy conversion efficiency Energy conversion efficiency (''η'') is the ratio between the useful output of an energy conversion machine and the input, in energy terms. The input, as well as the useful output may be chemical, electric power, mechanical work, light (radia ...
of
heat engine In thermodynamics and engineering, a heat engine is a system that converts heat to mechanical energy, which can then be used to do mechanical work. It does this by bringing a working substance from a higher state temperature to a lower state ...
s in
thermodynamics Thermodynamics is a branch of physics that deals with heat, work, and temperature, and their relation to energy, entropy, and the physical properties of matter and radiation. The behavior of these quantities is governed by the four laws of the ...
, the product ''P'' may be the amount of useful work output, while the consumable ''C'' is the amount of high-temperature heat input. Due to the
conservation of energy In physics and chemistry, the law of conservation of energy states that the total energy of an isolated system remains constant; it is said to be ''conserved'' over time. This law, first proposed and tested by Émilie du Châtelet, means th ...
, ''P'' can never be greater than ''C'', and so the efficiency ''r'' is never greater than 100% (and in fact must be even less at finite temperatures).


In science and technology


In physics

* Useful work per quantity of energy, mechanical advantage over ideal mechanical advantage, often denoted by the Greek lowercase letter η (
Eta Eta (uppercase , lowercase ; grc, ἦτα ''ē̂ta'' or ell, ήτα ''ita'' ) is the seventh letter of the Greek alphabet, representing the close front unrounded vowel . Originally denoting the voiceless glottal fricative in most dialects, ...
): **
Electrical efficiency The efficiency of a system in electronics and electrical engineering is defined as useful power output divided by the total electrical power consumed (a fractional expression), typically denoted by the Greek small letter eta (η – ήτα). : ...
**
Energy conversion efficiency Energy conversion efficiency (''η'') is the ratio between the useful output of an energy conversion machine and the input, in energy terms. The input, as well as the useful output may be chemical, electric power, mechanical work, light (radia ...
**
Mechanical efficiency In mechanical engineering, mechanical efficiency is a dimensionless number that measures the effectiveness of a mechanism or machine in transforming the power input to the device to power output. A machine is a mechanical linkage in which force ...
**
Thermal efficiency In thermodynamics, the thermal efficiency (\eta_) is a dimensionless performance measure of a device that uses thermal energy, such as an internal combustion engine, steam turbine, steam engine, boiler, furnace, refrigerator, ACs etc. For a he ...
, ratio of work done to thermal energy consumed *
Efficient energy use Efficient energy use, sometimes simply called energy efficiency, is the process of reducing the amount of energy required to provide products and services. For example, insulating a building allows it to use less heating and cooling energy to ...
, the objective of maximising efficiency ** In thermodynamics: ***
Energy conversion efficiency Energy conversion efficiency (''η'') is the ratio between the useful output of an energy conversion machine and the input, in energy terms. The input, as well as the useful output may be chemical, electric power, mechanical work, light (radia ...
, measure of second law thermodynamic loss **
Radiation efficiency In antenna theory, radiation efficiency is a measure of how well a radio antenna converts the radio-frequency power accepted at its terminals into radiated power. Likewise, in a receiving antenna it describes the proportion of the radio wave's ...
, ratio of radiated power to power absorbed at the terminals of an antenna **
Volumetric efficiency Volumetric efficiency (VE) in internal combustion engine engineering is defined as the ratio of the mass density of the air-fuel mixture drawn into the cylinder at atmospheric pressure (during the intake stroke) to the mass density of the same volu ...
, in internal combustion engine design for the RAF *
Lift-to-drag ratio In aerodynamics, the lift-to-drag ratio (or L/D ratio) is the lift generated by an aerodynamic body such as an aerofoil or aircraft, divided by the aerodynamic drag caused by moving through air. It describes the aerodynamic efficiency under give ...
*
Faraday efficiency Faraday efficiency (also called ''faradaic efficiency'', ''faradaic yield'', ''coulombic efficiency'' or ''current efficiency'') describes the efficiency with which charge (electrons) is transferred in a system facilitating an electrochemical reacti ...
, electrolysis *
Quantum efficiency The term quantum efficiency (QE) may apply to incident photon to converted electron (IPCE) ratio of a photosensitive device, or it may refer to the TMR effect of a Magnetic Tunnel Junction. This article deals with the term as a measurement of ...
, a measure of sensitivity of a photosensitive device *
Grating efficiency Diffraction efficiency is the performance of diffractive optical elements – especially diffraction gratings – in terms of power Power most often refers to: * Power (physics), meaning "rate of doing work" ** Engine power, the power pu ...
, a generalization of the reflectance of a mirror, extended to a diffraction grating


In economics

*
Productivity improving technologies The productivity-improving technologies are the technological innovations that have historically increased productivity. Productivity is often measured as the ratio of (aggregate) output to (aggregate) input in the production of goods and services. ...
*
Economic efficiency In microeconomics, economic efficiency, depending on the context, is usually one of the following two related concepts: * Allocative or Pareto efficiency: any changes made to assist one person would harm another. * Productive efficiency: no addit ...
, the extent to which waste or other undesirable features are avoided *
Market efficiency The efficient-market hypothesis (EMH) is a hypothesis in financial economics that states that asset prices reflect all available information. A direct implication is that it is impossible to "beat the market" consistently on a risk-adjusted bas ...
, the extent to which a given market resembles the ideal of a
efficient market
**
Pareto efficiency Pareto efficiency or Pareto optimality is a situation where no action or allocation is available that makes one individual better off without making another worse off. The concept is named after Vilfredo Pareto (1848–1923), Italian civil engine ...
, a state of its being impossible to make one individual better off, without making any other individual worse off ** Kaldor-Hicks efficiency, a less stringent version of Pareto efficiency **
Allocative efficiency Allocative efficiency is a state of the economy in which production is aligned with consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the mar ...
, the optimal distribution of goods **
Efficiency wages The term efficiency wages (or rather "efficiency earnings") was introduced by Alfred Marshall to denote the wage per efficiency unit of labor. Marshallian efficiency wages would make employers pay different wages to workers who are of different ef ...
, paying workers more than the market rate for increased productivity *
Business efficiency The efficiency ratio indicates the expenses as a percentage of revenue (''expenses'' / ''revenue''), with a few variations – it is essentially how much a corporation or individual spends to make a dollar; entities are supposed to attempt minimizi ...
, revenues relative to expenses, etc. *
Efficiency Movement The efficiency movement was a major movement in the United States, Britain and other industrial nations in the early 20th century that sought to identify and eliminate waste in all areas of the economy and society, and to develop and implement best ...
, of the Progressive Era (1890–1932), advocated efficiency in the economy, society and government


In other sciences

* In computing: **
Algorithmic efficiency In computer science, algorithmic efficiency is a property of an algorithm which relates to the amount of computational resources used by the algorithm. An algorithm must be analyzed to determine its resource usage, and the efficiency of an algor ...
, optimizing the speed and memory requirements of a computer program. **
Storage efficiency Storage efficiency is the ability to store and manage data that consumes the least amount of space with little to no impact on performance; resulting in a lower total operational cost. Efficiency addresses the real-world demands of managing costs, ...
, effectiveness of computer data storage ** Efficiency factor, in data communications *
Efficiency (statistics) In statistics, efficiency is a measure of quality of an estimator, of an experimental design, or of a hypothesis testing procedure. Essentially, a more efficient estimator, needs fewer input data or observations than a less efficient one to achie ...
, a measure of desirability of an estimator *
Material efficiency Material efficiency is a description or metric (''M''p) (the ratio of material used to the supplied material) which refers to decreasing the amount of a particular material needed to produce a specific product. Making a usable item out of thinner ...
, compares material requirements between construction projects or physical processes * Administrative efficiency, measuring transparency within public authorities and simplicity of rules and procedures for citizens and businesses * In biology: **
Photosynthetic efficiency The photosynthetic efficiency is the fraction of light energy converted into chemical energy during photosynthesis in green plants and algae. Photosynthesis can be described by the simplified chemical reaction :6 H2O + 6 CO2 + energy → C6H12O6 + ...
**
Ecological efficiency Ecological efficiency describes the efficiency with which energy is transferred from one trophic level to the next. It is determined by a combination of efficiencies relating to organismic resource acquisition and assimilation in an ecosystem. E ...


See also

*
Jevons paradox In economics, the Jevons paradox (; sometimes Jevons effect) occurs when technological progress or government policy increases the efficiency with which a resource is used (reducing the amount necessary for any one use), but the falling cost o ...


References

{{Authority control Economic efficiency Heat transfer Engineering concepts Waste management Waste of resources