Economics; Learning Curve Theory

Article excerpt

Byline: Dante Sy

Every activity or undertaking has a learning curve. The concept of a learning curve was introduced by T.P. Wright to the aircraft industry in 1936. As originally set up by Wright, the learning curve is a measure of the so-called doubling effect, that is, as the quantum of production is doubled, the cost of resources consumed in the process is reduced.

The premise of the learning curve theory is quite simple, practice makes perfect or the repetition of the same procedures should result in fewer units of time or efforts devoted to a particular activity or undertaking. It is for this reason that the learning curve is sometimes referred to as the experience curve or progress function. The Boston Consulting Group suggested the use of the term experience curve to indicate the progress of an industry in lowering its prices as a function of experience gained.

That efficiency can be enhanced by learning appears to be logical. This is because familiarity with or a comprehensive understanding of the requirements and scope of any given activity or undertaking enables the person working on or leading or shepherding the activity or undertaking to gain a high level of or a marked improvement in efficiency. Because of this, the application of learning curves has been greatly amplified. Nowadays, learning curves do not apply to the production aspect of business but to the other equally important business functions of marketing, distribution and customer service. …