ABSTRACT
The current measure that focuses purely on industrial output could actually work against the interests of society. Knowledge economics begins with a new definition of efficiency. Adaptive efficiency is the new efficiency in a knowledge-based economy. In an industrial society, people who had been similarly trained and educated produced similar ideas, this was efficient: they thought alike, communicated easily with each other and got through schooling in a similarly "easy" manner. Neoclassical social welfare theory says that a society's happiness is the sum of each person's optimal use of their resources. The Organisation for Economic Co-operation and Development has produced an alternative framework that gives weight to both material goods and non-material goods. Mishan, writing in 1960, reviews the history of social welfare and maintains that the fundamental theory of welfare economics has remained largely unchanged. Network theory shows that people who lie outside one's usual reference group are more likely to be the source of different ideas.
