Human agency and material welfare

Human agency means the ability and desire of individuals to choose how well they work and how they work. The central role of agency can be traced to the work of the late Harvey Leibenstein, inventor of x-efficiency theory and contributor to principal-agent theory.

In this book, the author extends the basic agency model where choice of effort affects productivity and efficiency to one in which choice of effort also affects choice of technology. Further, the author argues that higher wages do not necessarily mean lower profits - for instance, higher wages may "shock" a firm into becoming more x-efficient, thus raising its marginal-product-of-labor curve.

The book argues against traditional neoclassical beliefs including such ideas as competitive markets erode discrimination and that the integration of firms through mergers and acquisitions can save substantial transaction costs. In summary, this book calls for a new approach to the study of economics from a socio-economic and behavioral perspective.