Importance of Conscience in Total Factor Productivity: An Economic Model

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.