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

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  • Harashima, Taiji

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.

Suggested Citation

  • Harashima, Taiji, 2012. "A Theory of Intelligence and Total Factor Productivity: Value Added Reflects the Fruits of Fluid Intelligence," MPRA Paper 43151, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:43151
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    Cited by:

    1. Taiji HARASHIMA, 2018. "Wage Inequality And Innovative Intelligence-Biased Technological Change," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 9(1), pages 17-24.
    2. Harashima, Taiji, 2022. "How Many Innovations Need to Be Produced in the Process of Endogenous Growth with Fluid Intelligence," MPRA Paper 112813, University Library of Munich, Germany.
    3. Harashima, Taiji, 2024. "Disinformation and Mutual Trust: An Economic Model," MPRA Paper 121865, University Library of Munich, Germany.
    4. Harashima, Taiji, 2014. "Division of Work and Fragmented Information: An Explanation for the Diminishing Marginal Product of Labor," MPRA Paper 56301, University Library of Munich, Germany.
    5. Harashima, Taiji, 2017. "A Theory on the Economic Impacts of Immigration," MPRA Paper 78821, University Library of Munich, Germany.
    6. Harashima, Taiji, 2019. "The Correlation between Time Preference and Incomes Is Spurious: They Are Bridged by Fluid Intelligence," MPRA Paper 96756, University Library of Munich, Germany.

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    More about this item

    Keywords

    Total factor productivity; Intelligence; Innovation; Item response theory; Experience curve effect;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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