Pareto Efficiency

Italian economist and sociologist Vilfredo Pareto introduced the concept in his 1906 Manual of Political Economy, as part of his project to place economics on a mathematical and value-neutral footing. He defined "optimality" as the allocation state where no reallocation can improve one party's situation without worsening another's — a criterion that deliberately sidesteps questions of fairness or equality. The concept was later formalized in welfare economics by Abba Lerner, Paul Samuelson, and others through the mid-20th century.