paretoepäoptimaalinen

Paretoepäoptimaalinen is a Finnish term that translates to Pareto inefficient. In economics and game theory, a state is Pareto inefficient if it is possible to make at least one person better off without making anyone else worse off. This means that resources are not being allocated in the most efficient way possible, as there is room for improvement that benefits some without harming others.

A Pareto improvement is a change to a state that makes at least one person better off and no one worse off. If a state is Pareto efficient, then no Pareto improvements are possible. In such a state, any attempt to make one person better off would necessarily make someone else worse off. This does not mean that a Pareto efficient state is necessarily fair or equitable. It simply indicates that no further mutually beneficial (or at least not harmful) adjustments can be made.

The concept is named after Vilfredo Pareto, an Italian economist and sociologist. Pareto efficiency is a fundamental concept in welfare economics and is often used as a benchmark for evaluating the efficiency of different economic systems or policies. A situation that is Paretoepäoptimaalinen suggests that there are opportunities to reallocate resources or change policies to achieve a more desirable outcome for at least some members of society without negatively impacting others. Identifying Paretoepäoptimaalinen situations is a key step in finding ways to improve overall societal welfare.