Total Factor Productivity is an increasing function of ordinary workers’ fluid intelligence.
A Theory of Intelligence and Total Factor Productivity: Value Added Reflects the Fruits of Fluid Intelligence
Kanazawa Seiryo University
7 December 2012
Online at https://mpra.ub.uni-muenchen.de/43151/
MPRA Paper No. 43151, posted 7 December 2012
The model of TFP shows that TFP is an increasing function of ordinary workers’ fluid intelligence. It also shows that TFP depends substantially on ordinary workers’ fluid intelligence, and that production is almost impossible without it.
In this paper, a theory of TFP is proposed, and TFP is suggested to reflect the fruits of human intelligence. That the fluid intelligence of ordinary workers is an important element in TFP is particularly emphasized. Ordinary workers can also create something new (i.e., innovate) because they have intelligence, just as do researchers and other highly educated or trained employees. Although most innovations of ordinary workers are so minor that they do not become part of the accumulated knowledge of humanity, they are indispensable for production because a large number of minor unexpected problems that ordinary workers must address occur in the process of production.
A model of TFP is formulated on the basis of the finding that ordinary workers’ fluid intelligence is an essential element in TFP. TFP is modeled as a function of fluid intelligence, and item response theory, which is widely used in psychology and psychometrics, is used to specify the functional form. The model of TFP shows that TFP is an increasing function of ordinary workers’ fluid intelligence. It also shows that TFP depends substantially on ordinary workers’ fluid intelligence, and that production is almost impossible without it. Therefore, value added comes from the fruits of humans’ fluid intelligence.
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Productivity Science - Determinants of Productivity
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