Final answer:
Deborah Stone critiques the notion of efficiency as merely an input-output ratio by arguing it is relative to ethical considerations and particular societal contexts, such as income distribution, thus highlighting its subjective nature.
Step-by-step explanation:
Deborah Stone challenges the classic view of efficiency that typically emphasizes the ratio of input to output, or getting the most out of a given input. She argues that efficiency is a relative concept, rather than an absolute one, because it depends on values, goals, and the context within which it is measured.
Firstly, Stone challenges the notion of efficiency by emphasizing that outputs may vary in their value depending on ethical implications and social goals. For instance, society may face trade-offs between economic output and greater equality. A move toward greater equality may involve a reduction in raw economic outputs, as in moving from choice A to B in a scenario illustrating the trade-off between incentives and economic equality. However, in some instances, such as moving from point C to D, it is possible to increase both equality and economic output. The value placed on equality versus economic growth allows for efficiency to be judged differently depending on the ethical standpoint.
Another attack Stone uses is to consider the importance of the particular societal context, such as income distribution. Under a perfectly competitive market boasting both productive and allocative efficiency, the reality of different individuals' ability to pay still reflects the income distribution within that society. For example, a person with low income may not be able to afford technological innovations such as purchasing their own car, reflecting an inefficiency from their perspective.
These perspectives highlight that efficiency, rather than being an objective and absolute concept, is imbued with subjective values and context, and thus, should not be synonymously treated as an ideal state in every situation.