Neutron economy is defined as the ratio of excess neutron production divided by the rate of fission. The numbers are a weighted average based primarily on the energies of the neutrons.
 Nuclear fission is a process in which the nuclei of atoms are split apart. Among the various particles released in this process are high-energy neutrons with energies spread over the neutron spectrum. Those neutrons may cause other nuclei to undergo fission, leading to the possibility of a chain reaction. However, the neutrons can only cause another fission under certain conditions based on their energy; high-energy, or "relativistic", neutrons will often fly right through another nucleus without causing fission. The chance that a neutron will be captured increases greatly when its energy is about that of the target nucleus, which is known as a "thermal neutron". In order to maintain a chain reaction in a nuclear reactor, a neutron moderator is used to slow the neutrons down. This moderator is often used as the coolant that is used for energy extraction as well, and the most common moderator is water. The neutrons also slow due to elastic and inelastic collisions with fuel and other materials in the reactor.
 A fission reactor is based on the idea of maintaining criticality, where every fission event leads to another fission event, no more and no less. As fission of uranium releases two or three neutrons, this means some of the neutrons must be removed as part of the overall process. Some will be lost purely due to geometry, those released travelling outward from the outer edge of the fuel mass will not have a chance to cause fission, for instance. Others will be absorbed through various processes in the mass, and still others will be deliberately absorbed by control rods or similar devices to maintain the correct overall balance. The process of moderating the neutrons almost always leads to some of them being absorbed as well.
 Neutron economy is a measure of the number of neutrons being released that can cause fission compared to the number needed to maintain the chain reaction. This is not simply an accounting of the total number of neutrons, as it also includes a weighting based on the energy. Thus, remaining high-energy neutrons are not a major part of the "overall economy" as they do not maintain the chain reaction. The quantity that indicates how much the neutron economy is out of balance is given the term reactivity. If a reactor is exactly critical—that is, the neutron production is exactly equal to neutron destruction—the reactivity is zero. If the reactivity is positive, the reactor is supercritical. If the reactivity is negative, the reactor is subcritical.
 The term "neutron economy" is used not just for the instantaneous reactivity of a reactor, but also to describe the overall efficiency of a nuclear reactor design. Common reactor designs using conventional water as the coolant and moderator generally have poor relative neutron economies because the water will absorb some of the thermal neutrons, reducing the number available to keep the reaction going. In contrast, heavy water already has an extra neutron, and the same reaction generally causes it to be released, meaning that a reactor moderated with heavy water does not absorb neutrons and thus has a better neutron economy. Reactors with high neutron economies have more "leftover neutrons" which can be used for other purposes, like breeding additional fuel or causing sub-critical fission in nuclear waste to "burn off" some of the more radioactive components.
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