For Each of Labor, Firms, or Households, a Specific Non-Invertible Improvement To Cost Efficiency Is, Relative to an Improvement to Production Time Savings, a Less Ambiguous Welfare Concept

Abstract

Whereas the effects of cost efficiency on each of labor's, firms', or households' welfare are unambiguous, the effects of production time savings are found to be ambiguous. In stated respect, feasibly an increase to production time savings results in each of a diminution to labor's welfare; non-increase to firms' profitability; and maintenance of product prices. Contrarily, always cost efficiencies improve each of labor's, firms', or households' welfare. Let the `proficiency of labor' consist in the intentional incorporation of cost efficiency (RCR) into efforts for product design (TC) that serve to improve product quality, combined, TCRCR. With improvements to labor's welfare as the parameter of interest, this study's formal theory shows efforts for TCRCR are accompanied by a deterioration to production time savings (PTS). Let firms' welfare be a function of systemic improvements to firms' profitability. With improvements to firms' welfare as the parameter of interest, at any and all realizations of product quality, TCRCR facilitates an increase to firms' profitability per unit of time, but is not, simultaneously a source of PTS. With each of labor and firms exhibiting, rationally strictness of preference for TCRCR, if a socioeconomy values innovation, a parameterization of productivity as PTS is inimical. Since all rational households exhibit strictness of preference for the lower product prices that are facilitated by TCRCR, if firms deviate from the strict preference, the deviations are induced by any of frictions, imperfections, or behavioral biases, such as a systemic preference for positional living.

Keywords: Welfare, Revenue Function

JEL Classification: J01, J08, J30, E24