Efficiency Is Sacred

We all see some things as sacred. These things bind us to associates, via a shared a view of their importance. You can figure out what are your sacred things by seeing what you value, idealize, like to sacrifice for, are reluctant to tradeoff, want to clearly separate from mundane things, and prefer to feel not think about it. One of my sacred things is inquiry.

Seeing something as sacred induces you to put more energy into it. But it also induces you to see that thing as if from afar, even when it is close. That’s how humans are designed, so we can better see them the same. And this makes us neglect their details. For example, treating medicine as sacred makes us neglect to critically evaluate medical treatments, and suffer worse treatment as a result.

I we must treat something as sacred, we can minimize the cost of this distortion by treating things as sacred that are the least distorted by such treatment. I’ve previously argued that math is such a thing; treating math as sacred does much less to distort how we treat it.

In this post I want to argue that the mathematically defined concept of economic efficiency has a similar property. Economic efficiency is a standard that we economists use to evaluate policies. We are to ask how much people would be willing to pay, or be paid, to get some policies over others, considering all of the effects of such policies, and all of the ways people care about those policies, and given the same shared information about those policies. A policy is more efficient if people would pay more in total to get it.

By its construction, it is hard to idealize efficiency by dropping details, as it is already defined in terms of all the possibly relevant details. And an attitude of refusing to trade off other things against efficiency has little effect, as efficiency already embodies all possible tradeoffs. Thus treating efficiency as sacred does relatively little to distort it.

Now maybe our sacred instincts are less willing to treat efficiency as sacred. I don’t think we have good theories yet about this part of the sacred. But I greatly revere it, so at least some of us are able to some degree to treat it as sacred.