ABSTRACT
The conscious actions of purposeful individuals can help determine the level and rate of growth of gross national product (GNP), yet standard economic theory pays little or no attention to human agency as a primary determinant of society's material welfare. In this sense, human agency as a determinant of GNP is simply assumed away. But economic theory, if it is to be effective, must better incorporate human agency as a determinant of society's material well-being. Of particular interest to this chapter is the x-efficiency model developed by Harvey Leibenstein, where it is argued that, typically, the preferences of economic agents differ. The premise of differential preferences or objective functions among economic agents and effort discretion, elaborated upon by Leibenstein, establishes the basis for a model in which human agency is clearly a determinant of material welfare.
