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

Harashima, Taiji (2012): A Theory of Intelligence and Total Factor Productivity: Value Added Reflects the Fruits of Fluid Intelligence.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Total factor productivity; Intelligence; Innovation; Item response theory; Experience curve effect
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources ; Human Development ; Income Distribution ; Migration; O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy > O20 - General; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives; D - Microeconomics > D2 - Production and Organizations > D24 - Production ; Cost ; Capital ; Capital, Total Factor, and Multifactor Productivity ; Capacity

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