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Importance of Conscience in Total Factor Productivity: An Economic Model

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  • Harashima, Taiji

Abstract

Conscience plays an important role in reciprocal and altruistic behaviors because it restrains people from behaving totally selfishly, but why is conscience necessary? In this paper, I construct a model that describes the relationship between conscience and total factor productivity and show that a higher level of conscience in an economy increases its total factor productivity through an increase in the benefits of a society (or an economy) resulting from a smaller amount of various kinds of selfish behaviors and activities. Therefore, conscience is an important factor to achieve high economic efficiency. On the basis of this model, I discuss why total factor productivity in a country under the rule of a dictatorship could be half of that of a stably democratic country because a dictatorship will often prevail if the level of conscience of people in a society is very low.

Suggested Citation

  • Harashima, Taiji, 2025. "Importance of Conscience in Total Factor Productivity: An Economic Model," MPRA Paper 126633, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:126633
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    References listed on IDEAS

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    1. Harashima, Taiji, 2024. "Disinformation and Mutual Trust: An Economic Model," MPRA Paper 121865, University Library of Munich, Germany.
    2. Rafael Di Tella & Ricardo Perez-Truglia & Andres Babino & Mariano Sigman, 2015. "Conveniently Upset: Avoiding Altruism by Distorting Beliefs about Others' Altruism," American Economic Review, American Economic Association, vol. 105(11), pages 3416-3442, November.
    3. Harashima, Taiji, 2023. "An Economic Theory of Disinformation," MPRA Paper 116177, University Library of Munich, Germany.
    4. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    5. Harashima, Taiji, 2011. "A Model of Total Factor Productivity Built on Hayek’s View of Knowledge: What Really Went Wrong with Socialist Planned Economies?," MPRA Paper 29107, University Library of Munich, Germany.
    6. Christine L. Exley, 2016. "Excusing Selfishness in Charitable Giving: The Role of Risk," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(2), pages 587-628.
    7. Jason Dana & Roberto Weber & Jason Kuang, 2007. "Exploiting moral wiggle room: experiments demonstrating an illusory preference for fairness," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 33(1), pages 67-80, October.
    8. Colin F. Camerer & Richard H. Thaler, 1995. "Anomalies: Ultimatums, Dictators and Manners," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 209-219, Spring.
    9. Harashima, Taiji, 2025. "Disinformation, Benefit of Group Membership, and Conscience: An Economic Model," MPRA Paper 124120, University Library of Munich, Germany.
    10. Harashima, Taiji, 2009. "A Theory of Total Factor Productivity and the Convergence Hypothesis: Workers’ Innovations as an Essential Element," MPRA Paper 15508, University Library of Munich, Germany.
    11. 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.
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    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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