On measures of productivity

The welfare of an individual enterprise, as well as that of the national economy, very much depends on productivity. But it appears that methods for determining measures of productivity are lamentably unsophisticated and lead to many ambiguities and inconsistencies. It is generally suggested that productivity represents some ratio of output to input, but existing measures of inputs and outputs are unsatisfactory, largely because they gloss over the difficulties of reducing multi-inputs and multi-outputs to single denominators. This paper examines certain approaches that may be developed to handle some of the measurement problems involved in this area.