Almost every law student get's some introduction to normative law and economics in their first year of law school. One of the basic ideas of normative law and economics is that the law should be "efficient." But what does efficiency mean? For economists, "efficiency" is a technical idea–with only a tangential connection to the use of "efficiency" in ordinary speech. In order to understand economic efficiency, we will look at what are called the Pareto principles and a related idea that is sometimes called Kaldor-Hicks efficiency.
In addition to explicating the idea of efficiency, we will take a qucik look at some of the criticisms that might be made of this concept. Although many economists operate on the assumption that "efficiency" is an uncontroversial good, that conclusion is controversial both inside and outside of the discipline of economics.