Pareto Efficiency and Optometry

In economics, Pareto efficiency is when all the resources and goods in an economy are allocated to the maximum level of efficiency, and in such situation there is no room for any change to be made and therefore any change made would make someone worse off. A pure Pareto efficiency is theoretical and cannot exist in practice. However, markets and economies move toward a sort of Pareto efficiency when all goods and services are tradeable in competitive markets with no transaction costs. Moreover, a Pareto Improvment will occur when changes in the allocation of resources benefit at least one individual without making any other individual worse off.

In eye care and Optometry many think that the steep road that leads to success is the result of moving toward Pareto efficiency. However, the rational behind it is due to the lack of entrepreneurship and the excess in risk aversion. If we think of applying the Pareto efficiency theory and relating it to the steep road to success in Optometry, it would be very difficult because of the constant involvement of new technologies. The Pareto efficiency is used in policy making; in eye care it is almost impossible to make any change without affecting or making another individual worse off.

For example, selling contact lenses online has made a strong negative impact on the regular schedules for eye exam. Other diagnostics procedures that optometrists perform have a significant effect on ophthalmologists and vice versa. In this context it is very difficult to think of a Pareto efficiency or a Pareto improvement in eye care. However, the third principle of Gregory Mankiw’s principles of economics that states “rational people think at the margin” is applicable and more appropriate than applying the Pareto efficiency theory.

People rarely decide to perform a service or produce a product if the marginal benefit does not exceed the marginal cost. This explains in part why ophthalmologists abandon procedures to optometrists and why optometrists abandon procedures or products to online sellers and other disruptors.