A Theory of Intelligence and Total Factor Productivity: Value Added Reflects the Fruits of Fluid Intelligence

Taiji Harashima

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper, a theory of total factor productivity (TFP) that incorporates a model of intelligence is formulated and described. In particular, the fluid intelligence of ordinary workers is emphasized as an important element in TFP because such workers have the intelligence to innovate, even though their innovations are minor. Nevertheless, these innovations are essential for production because they solve many small but unexpected problems that ordinary workers must address. The TFP model is based on item response theory, which is widely used in psychology and psychometrics. TFP is assumed to be an increasing function of ordinary workers’ fluid intelligence, without which production is virtually impossible. Therefore, the model suggests that TFP is derived from the fruits of human intelligence.

Keywords: Total factor productivity; Intelligence; Innovation; Item response theory; Experience curve effect (search for similar items in EconPapers)
JEL-codes: D24 O15 O20 O31 O47 (search for similar items in EconPapers)
Date: 2012-12-07
New Economics Papers: this item is included in nep-eff and nep-ino
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:43151

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