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Inefficiency Measurement

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  • Christopher P. Chambers
  • Alan D. Miller

Abstract

We introduce an ordinal model of efficiency measurement. Our primitive is a notion of efficiency that is comparative, but not cardinal or absolute. In this framework, we postulate axioms that an ordinal efficiency measure should satisfy. Primary among these are choice consistency and planning consistency, which guide the measurement of efficiency in a firm with access to multiple technologies. Other axioms include scale invariance, strong monotonicity, and a continuity condition. These axioms characterize a family of path-based measures. By replacing the continuity condition with symmetry, we obtain the coefficient of resource utilization.

Suggested Citation

  • Christopher P. Chambers & Alan D. Miller, 2014. "Inefficiency Measurement," American Economic Journal: Microeconomics, American Economic Association, vol. 6(2), pages 79-92, May.
    • Handle: RePEc:aea:aejmic:v:6:y:2014:i:2:p:79-92
    Note: DOI: 10.1257/mic.6.2.79
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    References listed on IDEAS

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    8. Christopher Chambers & Alan Miller, 2011. "Rules for aggregating information," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 36(1), pages 75-82, January.
    9. R. Russell & William Schworm, 2011. "Properties of inefficiency indexes on 〈input, output〉 space," Journal of Productivity Analysis, Springer, vol. 36(2), pages 143-156, October.
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    Citations

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    Cited by:

    1. Chambers, Christopher P. & Miller, Alan D. & Yenmez, M. Bumin, 2020. "Closure and preferences," Journal of Mathematical Economics, Elsevier, vol. 88(C), pages 161-166.
    2. Chambers, Christopher P. & Miller, Alan D., 2014. "Scholarly influence," Journal of Economic Theory, Elsevier, vol. 151(C), pages 571-583.
    3. Banerjee, Kuntal & Mitra, Tapan, 2018. "On Wold’s approach to representation of preferences," Journal of Mathematical Economics, Elsevier, vol. 79(C), pages 65-74.
    4. Chambers, Christopher P. & Ye, Siming, 2024. "Haves and have-nots: A theory of economic sufficientarianism," Journal of Economic Theory, Elsevier, vol. 217(C).
    5. Domenico Moramarco & François Maniquet, 2022. "On the measurement of well-being with reference consumption," Working Papers 629, ECINEQ, Society for the Study of Economic Inequality.
    6. Aldo Montesano, 2018. "A Dual Characterization of Pareto Optimality," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 4(1), pages 153-188, March.
    7. Fleurbaey, Marc & Maniquet, François, 2017. "Addendum to “Fairness and well-being measurement”," Mathematical Social Sciences, Elsevier, vol. 90(C), pages 127-128.
    8. François Maniquet & Domenico Moramarco, 2022. "On the Measurement of Well-Being with Reference Consumption," Working Papers ECARES 2022-41, ULB -- Universite Libre de Bruxelles.
    9. Elisa Pagani, 2015. "Certainty Equivalent: Many Meanings of a Mean," Working Papers 24/2015, University of Verona, Department of Economics.
    10. Mette Asmild & Tomas Baležentis & Jens Leth Hougaard, 2016. "Multi-directional productivity change: MEA-Malmquist," Journal of Productivity Analysis, Springer, vol. 46(2), pages 109-119, December.

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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D60 - Microeconomics - - Welfare Economics - - - General

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