Respected Sir,

I am sending words of someone,

BIRUKJanuary 18, 2012 at 2:05 PM

For me effeciency is "doing things right" while effeciveness is "doing the right thing" so effeciency will Weight more in scarecely resourced world

Bikash  -

There seems no point to me in being efficient at doing something that is ineffective.  If a course of action is very ineffective, then the most efficient thing to do is nothing. But since effectiveness and efficiency are not absolute terms, but matters of degree, I would think that starting with the idea of attaining a goal (your effectiveness), and looking at levels of efficiency to obtain levels of that goal, would be a good way to find a good compromise so that you attain a reasonable degree of your goal at a reasonable cost.

I suppose you could approach this from the other direction, but in my opinion I would want to first consider the goal(s). 

Cheers - Jim 

PS -  So for the first step, I would start with the goal, and see if I could afford to do something reasonable about it. 

Just as food for thoughts...Optimality is a point that is both effective (doing the right thing) and efficient(doing things right) at the sametime.  Optimality is at the heart of sustainability markets.

Greetings to all and happy new year

Thank you James for your valuable insight and opinion. I fully admit that setting the  goal is paramount importance but attaining it with the best possible degree of EE is largely often governed by our working environment ( organisational culture/norms, incentive structure ) making us either fully motivated or demotivated even if our individual goal matched with organizational goal. I would appreciate your further deliberation on this.    

I agree George, that ideas are very important, and that having your goals support organizational goals, Bikash, is also very important.  The statistical agency in which I worked for the last quarter century before I retired needed ideas desperately in order to attempt to meet demands for official statistics under crippling resource restrictions. According to a recent official report, a great part of resource problems at that agency have been due to unwise management decisions: something about which I'd say that those of us trying to get things done were all very aware, for a long while.   And though I had ideas that were very useful for more efficiently and accurately meeting goals, they were not always efficiently implemented, nor as effectively implemented as they very easily could have been, or even implemented at all, at times.  It is my further opinion [disclaimer: just my continued personal, unofficial opinion] that management and others may have veered too far from the necessary goals of the agency, to work on frivolous activities, which also had detrimental impacts on performance.  So yes, work environment is crucial.  

I think that there is a difference between efficiency and effectiveness. Economic efficiency is said mainly for firms whereas effectiveness is said for a policy or a measure or program. Both terms are important.

What a coincidence ! Excuse me to bring a question in industrial chemistry final exam which I gave to the students on 14/12/20015: 

In the industrial production of chemicals, when no reaction with a high efficiency & a high conversion is available which is better to use: (A) a chemical reaction with a high efficiency & a low conversion or (B) a chemical reaction with a low efficiency & a high conversion ? ______

Of course, the answer is (A) because when the conversion is low, the unconverted chemicals can be recycled into the reactor to increase the yield. Therefore, effectiveness can be resolved easily but efficiency CANNOT. In many cases, we give priority to efficiency over effectiveness.

Let me give a brief health care example as this is my field of research. What is the point of making an inpatient admission as efficient (least cost for a given level of quality) as possible if we could have treated the patient efficaciously on an outpatient basis, or better yet had intervened earlier and made any type treatment not necessary in the first place?

Dear friends, it looks like sharing ideas in good faith here leads to people downvoting your contritution anonnimusly ,, I am disappointed at RESEARCHGATE for providing a secret  action that undermines positive academic discourse and the growht of knowledge as then somepeople can take action without academic responsibility..... I politely leave this discussion and wish you all a good new year.

Respectfully yours;

I like to clarify efficiency versus effectiveness in an important area:

Energy efficiency means doing the same amount of work while consuming less energy. For example, a well-insulated house is more energy efficient than a less insulated one because less heat escapes and therefore less heat is needed to maintain a comfortable living environment.

With modern technology, only about 15% of the fuel used in vehicles actually serves to move the vehicle, or for other useful features such as air conditioning. The remaining 85% of fuel energy is lost . Internal combustion engines (ICEs) convert the fuel’s chemical energy to mechanical energy, losing 62% of the fuel’s energy to engine friction, pumping air into and out of the engine, and wasted heat. This means that the energy efficiency is just 38 %. This figure , which shows considerable inefficiency, was raised from much lower values after huge efforts in R&D.

In applied chemistry, modern vehicles are regarded as effective means of transportation & their effectiveness was increased much more easily in many aspects than their efficiency. A student, who gets 38/100 in an exam , has failed so ICEs are still far from being perfect.

Your question is too broad on my opiniion. It is not clear whether you are focused in your analysis on micro or macro level. There is a good literature review of methods for measuring efficiency and productivity on both levels. It is focused on agriculture, but methods are universally applicable:

Laure Latruffe "Competitiveness, Productivity and Efficiency in the Agricultural and Agri-Food Sectors"No. 30, 2010, OECD  papers

http://www.oecd-ilibrary.org/agriculture-and-food/competitiveness-productivity-and-efficiency-in-the-agricultural-and-agri-food-sectors_5km91nkdt6d6-en?crawler=true

The area that is not covered there is spatial economics. I hope  that will help. 

Sure, that is reason why the question is deliberately framed in a broader senses embracing issue at different levels( micro, macro) of any discipline/field. Let me reiterate that the pertinent question is not about measuring E & E but why ( and under what conditions, say when we are working in different organisational culture) it is not always possible to achieve both  and what do you think should be the preferred alternative choice if there is potential trade off.        

In my somewhat strange opinion, they are both part of the same aim--greater prosperity, and there is no need to balance one against the other. The most effective and efficient way to run a national economy is by eliminating poverty and the associated greed and corruption related to speculation in land values. As Henry George suggested 135 years ago, one should incentively tax land values and nothing else. The various aspects of Land Value Taxation (LVT) ate listed below:

15 ASPECTS of LAND-VALUE TAXATION (LVT) affecting Government, Land Owners, Community and Ethics

Three aspects for GOVERNMENT:

1. LVT, adds to the national income.

2. The cost of collecting the LVT is much smaller than for income tax and

other production-related taxes.

3. With LVT, the national economy stabilizes and no longer experiences the 18 year housing boom and bust cycle because speculation and over-pricing of land ceases.

 Six aspects affecting LAND OWNERS:

4. LVT is progressive, the owners of the most potentially productive sites pay the most tax.

5. The land owner pays his LVT regardless of how the land is used. When the land is leased to tenants most or all of the resulting ground-rent is the tax.

6. LVT stops the speculation in land prices because any withholding of land from proper use is too costly.

7. The introduction of LVT reduces the sales price of sites even though their value (or potential usefulness) may continue to grow.

8. With LVT, land owners are unable to pass the tax on to their tenant renters, due to the competition for the land use.

9. With the introduction of LVT, land prices will initially drop. Speculators in land values will tend to foreclose on their mortgages and to withdraw their money for reinvestment. LVT should be introduced gradually so that it allows investors sufficient time to transfer money to company-shares where their greater use will meet the increased demand for produce (see below).

 Three aspects regarding our COMMUNITY:

10. With LVT, there is an incentive to use land for production, rather than it laying idle or being partly used.

11. With LVT, greater working opportunities exist due to cheaper land and a greater number of available sites. Consumer goods become cheaper because entrepreneurs have less difficulty in starting-up and running their businesses. Demand grows, unemployment decreases.

12. As LVT is introduced, investment money is withdrawn from land and placed in durable capital goods. This means more advances in technology and cheaper goods.

 Three aspects about ETHICS

13. The collection of taxes directly from productive effort and commerce is socially unjust. LVT replaces this form of extortion by gathering the surplus rental income which comes without exertion. Consequently LVT is a natural system of money-gathering.

14. Bribery and corruption cease with LVT. Before, this was due to the leaking of news of municipal plans for housing development.

15. The improved use of the land will reduce the damage being done to the environment due to the sites being held unused being dumping grounds as well as the greater distances needing to be traveled between home and workplace requiring more transportation services and the associated emissions due to unnecessarily fuel use.

This approach to revised taxation is both effective and efficient. Tax land not people,; tax takings not makings!

Thank you David for bringing this LVT perspective into picture.   

I, too, agree with David. I had this same curiosity when I read Tim Ferriss's Four Hour Workweek. Tim suggested Effectiveness, not Efficiency was the path to greater productivity.

I could not agree with Tim on this.

They are not mutually exclusive, but they differ in terms of succession. We should think about effectiveness first, and then about efficiency. 

I think the analogy can extend to leadership and management. We have to get leadership right, at first, then we should get management right. Leadership is to effectiveness as Management is to efficiency.  

There is something more you can do about it, and that is to seek out your nearest branch of Georgists and join them and possibly look on their website (HenryGeorge.com or progress.org etc.) for a more detailed explanation and reading material.

A firm has to be able to do both effectiveness and efficiency; its unavoidable.  Otherwise the firm has no future.

Firms that are only able to be efficient, will die as the macro trends change around them and their business advantages disappear.. A great example of this are the current solar companies.  If my firm is very efficient at executing solar installations, but ignorant of the wider business trends (falling sola PV prices, improvements in battery technologies etc), my competitors that are more attuned to these wider business trends will be more sustainable than me no matter how great my execution model is today.

Similarly, if my firm is only focused on research and development, trends, new product development, new service development activities but  is totally incapable of executing revenue operations efficiently, then my business too shall die in the fullness of time.  The firm must be able to translate its research and NPD into efficient execution of a business and revenue model.

https://www.researchgate.net/publication/299747565_Towards_a_talent-driven_outward-oriented_globally-competitive_SME_framework_Discussion_Paper

(DOI: 10.13140/RG.2.1.1461.0320 )

https://www.researchgate.net/publication/305687139_Priority_policy_recommendations_for_transforming_individual_productivity_and_SME_competitiveness_in_Jamaica

https://www.researchgate.net/publication/303858978_Organizational_ambidexterity_as_a_new_research_paradigm_in_strategic_management

https://www.researchgate.net/publication/220520947_Organizational_Ambidexterity_Balancing_Exploitation_and_Exploration_for_Sustained_Performance

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