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Efficiency is the often measurable ability đồ sộ avoid wasting materials, energy, efforts, money, and time while performing a task. In a more general sense, it is the ability đồ sộ bởi 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 đồ sộ achieve the highest amount of output. It often specifically comprises the capability of a specific application of effort đồ sộ produce a specific outcome with a minimum amount or quantity of waste, expense, or unnecessary effort. Efficiency refers đồ sộ very different inputs and outputs in different fields and industries. In 2019, the European Commission said: "Resource efficiency means using the Earth's limited resources in a sustainable manner while minimising impacts on the environment. It allows us đồ sộ create more with less and đồ sộ 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. In general, efficiency is a measurable concept, quantitatively determined by the ratio of useful output đồ sộ total useful input. Effectiveness is the simpler concept of being able đồ sộ achieve a desired result, which can be expressed quantitatively but does not usually require more complicated mathematics than thở 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 đồ sộ friction or other causes, in which case 100% of fuel or other input would be used đồ sộ produce the desired result. In some cases efficiency can be indirectly quantified with a non-percentage value, e.g. specific impulse.
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 đồ sộ working longer hours or with greater physical effort than thở in other companies or countries or if they can be forced đồ sộ bởi ví. Similarly, a company can achieve effectiveness, for example large production numbers, through inefficient processes if it can afford đồ sộ use more energy per product, for example if energy prices or labor costs or both are lower than thở for its competitors.
Inefficiency is the absence of efficiency. Kinds of inefficiency include:
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- Allocative inefficiency refers đồ sộ 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 exceeds the price that consumers are willing đồ sộ pay for an extra unit of the product. This is true, for example, if the firm produces pollution (see also external cost). Consumers would prefer that the firm and its competitors produce less of the product and charge a higher price, đồ sộ internalize the external cost.
- Distributive inefficiency refers đồ sộ 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 thở inegalitarian distributions. Distributive inefficiency is often associated with economic inequality.
- Economic inefficiency refers đồ sộ 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 đồ sộ bởi a better job, given the available resources and technology. Sometimes, this type of economic efficiency is referred đồ sộ as the Koopmans efficiency.
- Keynesian inefficiency might be defined as incomplete use of resources (labor, capital goods, natural resources, etc.) because of inadequate aggregate demand. We are not attaining potential output, while suffering from cyclical unemployment. We could bởi a better job if we applied deficit spending or expansionary monetary policy.
- 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 đồ sộ apply in a constantly changing world, ví 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 thở other firms in the market). See Sickles and Zelenyuk (2019, Chapter 3) for more extensive discussions.
- Resource-market inefficiency refers đồ sộ barriers that prevent full adjustment of resource markets, ví that resources are either unused or misused. For example, structural unemployment results from barriers of mobility in labor markets which prevent workers from moving đồ sộ places and occupations where there are job vacancies. Thus, unemployed workers can co-exist with unfilled job vacancies.
- X-inefficiency refers đồ sộ inefficiency in the "black box" of production, connecting inputs đồ sộ outputs. This type of inefficiency says that we could be organizing people or production processes more effectively. Often problems of "morale" or "bureaucratic inertia" cause X-inefficiency.
Productive inefficiency, resource-market inefficiency, and X-inefficiency might be analyzed using data envelopment analysis and similar methods.
Efficiency is often measured as the ratio of useful output đồ sộ 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 đồ sộ a percentage if products and consumables 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 of heat engines in thermodynamics, the product P may be the amount of useful work output, while the consumable C is the amount of high-temperature heat input. Due đồ sộ the conservation of energy, P can never be greater than thở C, and ví the efficiency r is never greater than thở 100% (and in fact must be even less at finite temperatures).
In science and technology
- Useful work per quantity of energy, mechanical advantage over ideal mechanical advantage, often denoted by the Greek lowercase letter η (Eta):
- Electrical efficiency
- Energy conversion efficiency
- Mechanical efficiency
- Thermal efficiency, ratio of work done đồ sộ thermal energy consumed
- Efficient energy use, the objective of maximising efficiency
- In thermodynamics:
- Energy conversion efficiency, measure of second law thermodynamic loss
- Radiation efficiency, ratio of radiated power đồ sộ power absorbed at the terminals of an antenna
- Volumetric efficiency, in internal combustion engine design for the RAF
- In thermodynamics:
- Lift-to-drag ratio
- Faraday efficiency, electrolysis
- Quantum efficiency, a measure of sensitivity of a photosensitive device
- Grating efficiency, a generalization of the reflectance of a mirror, extended đồ sộ a diffraction grating
- Productivity improving technologies
- Economic efficiency, the extent đồ sộ which waste or other undesirable features are avoided
- Market efficiency, the extent đồ sộ which a given market resembles the ideal of an efficient market
- Pareto efficiency, a state of its being impossible đồ sộ make one individual better off, without making any other individual worse off
- Kaldor-Hicks efficiency, a less stringent version of Pareto efficiency
- Allocative efficiency, the optimal distribution of goods
- Efficiency wages, paying workers more than thở the market rate for increased productivity
- Business efficiency, revenues relative đồ sộ expenses, etc.
- Efficiency Movement, of the Progressive Era (1890–1932), advocated efficiency in the economy, society and government
In other sciences
- In computing:
- Algorithmic efficiency, optimizing the tốc độ and memory requirements of a computer program.
- A non-functional requirement (criterion for quality) in systems design and systems architecture which says something about the resource consumption for given load
- Efficiency factor, in data communications
- Storage efficiency, effectiveness of computer data storage
- Efficiency (statistics), a measure of desirability of an estimator
- Material efficiency, 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
- Ecological efficiency
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