That is correct for Pareto efficiency but it must be pointed out that there is a different (infinite set) of Pareto efficient points corresponding to each and every (infinite set) of income/wealth distributions. That is, income/wealth distribution is a given and is 'outside the realm of economics' as it pertains to economic efficiency.
Paul
k hanly wrote:
How does this concept of efficiency relate to pareto efficiency that is the view that a situation is efficient when no one can be made better off without someone else being made worse off, at least something like that! In terms of Pareto efficiency certainly if the poor could not pay for medicine or no one was willing to pay for it then it would not be Pareto efficient to purchase medicine for them. THe definition is hardly value neutral, efficiency would favor the rich's realization of their utility whereas in most cases realisation of the utiliity of the poor would be inefficient and the term is always used as if inefficiency is a prima facie bad.. In particular it would be inefficient should the rich not wish to provide them with money. I guess the moral though would be that generous charity would increase efficiency whereas taxation that took from some against their will to pay for the needs of the poor would be inefficient!Cheers, Ken Hanly ----- Original Message ----- From: "paul phillips" <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Sent: Tuesday, January 06, 2004 1:48 PM Subject: Re: Concept of efficiencyKen, The neoclassical concept of efficiency is defined as "the relationship between scarce Factor inputs and outputs of goods and services" Economic efficiency is defined in cost terms. i.e. the lowest cost for producing the level of output that is demanded at that cost.. (See for instance the Harper Collins Dictionary of Economics). However, even this concept is narrower since it is restricted to single markets and excludes externalities. Prolonging the life of poor people, in this concept, is not 'efficient' if the poor are unable to pay for medicine, etc.
