When we improve a system’s economic efficiency, we allow it to produce the same amount of output (or more) with fewer inputs. Economists like these kinds of improvements because they free up resources that can be then used to produce other goods and services, and in most markets, improving efficiency in production results in higher output and lower prices for everyone.

And yet, when new technology (most recently the MOOC) promises to improve efficiency of the education system, many people complain bitterly. As an economist, I find this very unintuitive, but I’m starting to understand what’s going on.

First of all, some of the most vocal “opponents” of efficiency are educators who find the potential induced changes in the market personally threatening. If the new technology reduces the need for teachers, then these folks could lose their jobs. They don’t want to be the 21st century equivalent of buggy whip manufacturers, stuck with a set of skills that no one wants or needs.

Innovation happens and markets adjust. Economic theory says that on average there will be positive gains from improvements in productive efficiency, but at the individual level there will be some winners and losers. If you are worried about your job going away, then it is your responsibility to acquire new skills and adapt to the new world.

The second potential problem with educational efficiency gains is that policy makers will use the new technology to cut costs (which are easy to measure) without noticing (or caring) that the resulting product is substantially lower quality. Even if students in MOOC’s and traditional classes scored similarly on tests, there are harder-to-measure benefits of working closely with a flesh-and-blood teacher.

This could happen, but the fact that education is in many places a competitive market makes it harder for policy makers to make too much of a mess. Students will have many new choices in coming years as MOOC’s figure out how to reach their potential customers and assess their performance better. Employers will recognize the value of the MOOC education if it’s good and they won’t if it’s not good. Students won’t choose go to “MOOC university” unless it has the personal and professional rewards to make it a better deal (per dollar) than a traditional university.

At the same time, some universities will incorporate aspects of MOOC’s into their current teaching including flipping the classroom or using online discussion forums. If these changes mean lower costs for the university, that’s great. If it means the quality of the teaching goes down, students will go elsewhere.

The trouble comes in where education is not a competitive market. If quality goes down at the big local public university, students might not have an obvious alternative. At the K-12 level, the market is even less competitive.

The bottom line is that the consequences of improving efficiency in education aren’t a priori completely obvious. I am excited about the potential for large cost savings and increases in average quality and quantity of education, but it’s also possible that in some places quality will suffer. We will need to watch carefully to see what happens.