X-Efficiency

X-efficiency unfortunately does not have much to do with the X-men. In fact, uh...it doesn't have anything to do with them.

X-efficiency describes the gap between how efficient businesses really are and how efficient they should be, in theory (hint: they should be more efficient than they likely are).

Neoclassical economics is a fairytale land where there’s perfect competition, and therefore perfect efficiency in response, no more and no less. But the real world looks different. There’s imperfect competition, which means businesses can be a bit lazy and not be so efficient, while still staying in business and turning a profit.

X-efficiency was a concept introduced by Harvey Leibenstein in 1966, in the era of psychedelics. Maybe psychedelics helped bring neoclassical economics back down to earth.