Cost-Effective vs. Cost-Efficient
A reader has asked about the use of these two terms:
I was wondering if you would care to comment on the difference between cost-efficient and cost-effective. In both, Oxford and Webster (the free online versions), cost-effective is properly defined while the cost-efficient page points to that of cost-effective. It looks like cost-efficient is a tolerated synonym of a lesser status.
As always, my starting place is The Oxford English Dictionary. There I find a reference to cost-effective in the entry for cost:
cost-effective adj. designating or pertaining to a project, etc., that is effective in terms of its cost.
The first OED citation given for cost-effective is dated 1967. I find no entry for cost-efficient.
Merriam-Webster Unabridged provides entries for both terms:
cost-effective adjective: economical in terms of tangible benefits produced by money spent.
cost-efficient adjective: cost-effective.
M-W gives 1970 as the “first known use of cost-efficient.”
I conclude that there is no difference of meaning between cost-effective and cost-efficient.
Is one term of “lower status” than the other?
The most that can be said is that one is more common than the other.
The OED and M-W date the terms from 1967 and 1970, but the Ngram Viewer shows that cost-effective was present in printed sources as early as 1836. Both terms are documented in works printed in 1887. Cost-effective shows a bump on the graph in the 1940s, but then both terms remain more or less even until the 1960s, when cost-effective soars ahead.
A Google search also shows a preference for cost-effective:
“cost-effective”: about 83,600,000 results
“cost-efficient”: about 7,840,000 results
My advice is to use the more common term: cost-effective.
Subscribe to Receive our Articles and Exercises via Email
- You will improve your English in only 5 minutes per day, guaranteed!
- Subscribers get access to our exercise archives, writing courses, writing jobs and much more!
- You'll also get three bonus ebooks completely free!
3 Responses to “Cost-Effective vs. Cost-Efficient”
I tell my economics students to distinguish between effective and efficient – the former implies “having the desired effect” and the latter “having the desired effect in the most economical way.” I believe I also looked that up once.
Applying this definition to cost-effective vs. cost-efficient (and combining it with the business literature, especially accounting), my interpretation would be: cost-effective = s.th. generates or triggers costs, while something done in a cost-efficient way is something done the most economical way.
However, while I would point out this difference to the author whose article I am refereeing for a business/economics journal, I am indifferent to it outside the academic world.
Let me also use this opportunity to thank you for all your hard work providing us with these posts. I am certain they make a difference in what is out there to read, and I sure hope it continues to do so.
Tony Cook (B.Econ) points out a use in which both terms may differ in meaning:
In my days as an economist, “cost effective” meant a measure saved or earned more than it cost.
If there were a number of cost effective measures to choose from, identifying one as cost efficient would mean that it was the best economic choice. In other words a (cost effective) measure would not be cost efficient if you could have invested in another measure which would have given an even better economic outcome.
In my opinion, cost-effective means that an investment is worth the cost (in terms of its value measured by defined outcomes criteria). A cost-efficiency analysis would in contrast strive to identify the least costly way to achieve a desired outcome.