Question

[10 pts] “Efficiency implies cost-effectiveness, but cost-effectiveness does not imply efficiency” Explain this statement

Answer 1

For a policy to be efficient it will be certainly cost-effective however cost-effectiveness does not necessarily imply efficiency. The cost-effective is achieved when a policy produces the maximum improvement for the resources at the lowest possible cost. The policy can be cost effective, which means at the lowest cost or provides the biggest gains, however the target is wrong thus is inefficient. Moreover it might be cost-effective however not efficient because the group that is benefitted doesn’t require the benefit.