ABSTRACT
This entry introduces the concept of efficiency and discusses the validity of the concept being used as the primary criterion of performance measurement in the public sector. Efficiency is defined as the ratio of outputs to inputs. It describes the cost of resources used for an activity to achieve given outputs. This entry shows how the formula applies to prevalent management techniques such as cost–benefit analysis and data envelopment analysis. This entry introduces an argument related with efficiency. It is neither desirable nor reasonable to measure government performance based on economic efficiency. This entry holds that there are two kinds of efficiency: technical efficiency and social efficiency. When government performance is evaluated based on the rationale of efficiency, those two concepts should be considered.
