<p>It is total because it takes into account all output per all inputs - hence it is the total productivity of all factors.</p>
<p>Total factor productivity as that excerpt from Wikipedia states is given as:</p>
<p><span class="math-container">$$TFP=\frac{\text{GDP}}{\text{All Factors}}$$</span></p>
<p>that is where the total comes from. In practice, the factors used in denominator are capital and labor, but they are measured very broadly to include other factors (e.g. human capital will often be 'hidden' in the labor variable). However, this being said some factors are very hard to measure (e.g. some economists consider entrepreneurship a factor of production), this is why some economists prefer to call it multifactor productivity (i.e. it is productivity of multiple factors but not all), as mentioned in the <a href="https://stats.oecd.org/glossary/detail.asp?ID=3091" rel="nofollow noreferrer">OECD glossary</a>. However, it has nothing to do with complementarity which in economics has completely different meaning than what you imply in the question so CFP would make no sense.</p>
<p>Also, the passage you cite as reason for your confusion is actually <strong>not</strong> about total factor productivity but about <strong>growth</strong> in total factor productivity, i.e. not TFP but <span class="math-container">$\Delta$</span>TFP. Those are two different variables in the same way as GDP and <em>growth</em> rate of GDP are not the same.</p>
<p>The idea here is simple, if output (GDP) grows, but all factors remain same, that means that the productivity of all the factors used must have increased.  However, in real life things usually don't remain constant so you will observe that quantity of inputs economy uses increases over time, but if output increases even faster that has the same implication as the case when inputs remain constant and output grows, namely it means productivity of all those factors is increasing.</p>

CC BY-SA 4.0
2021-01-26T21:52:44.970Z
2021-01-26T21:52:44.970Z
1muflon1
<blockquote>
<p>In economics, total-factor productivity (TFP), also called
multi-factor productivity, is usually measured as the ratio of
aggregate output (e.g., GDP) to aggregate inputs.<a href="https://en.wikipedia.org/wiki/Total_factor_productivity" rel="nofollow noreferrer">1</a> Under some
simplifications about the production technology, growth in TFP becomes
the portion of growth in output not explained by growth in
traditionally measured inputs of labour and capital used in
production.</p>
</blockquote>
<p><a href="https://en.wikipedia.org/wiki/Total_factor_productivity" rel="nofollow noreferrer">https://en.wikipedia.org/wiki/Total_factor_productivity</a></p>
<p>How can factors &quot;not explained by growth in traditionally measured inputs of labour and capital&quot; come to be described as &quot;total&quot;? Etymology, please. It would seem like &quot;not explained&quot; implies &quot;complements&quot; and &quot;complementary&quot; so CFP sounds better than TFP.</p>
<p><strong>Addendum</strong>...  It turns out that TFP has another name... the &quot;Solow residual&quot;. A quote <a href="https://www.economist.com/finance-and-economics/2022/05/07/why-long-term-economic-growth-often-disappoints" rel="nofollow noreferrer">from the Economist on 2022 May 7</a>.</p>
<blockquote>
<p>Statistical techniques that try
to measure the concept of “knowledge” typically bundle all the
variation in growth that cannot be explained by changes in the
workforce or investment into the black box. Hence TFP’s other, less
flattering name—the “Solow residual”. Rather than a reliable metric of
society’s level of knowledge, TFP so far seems to remain, in the words
of a Solow critic, a “measure of our ignorance”.</p>
</blockquote>

CC BY-SA 4.0
2021-01-27T00:27:40.687Z
Why the unimaginative effortless downvoting without some constructive comment?
Jesper Hybel
<productivity>
etymology of TFP (total factor productivity)
H2ONaCl
# etymology of TFP (total factor productivity)

(Asked by: username_0 on 2021-01-26)

> In economics, total-factor productivity (TFP), also called
> multi-factor productivity, is usually measured as the ratio of
> aggregate output (e.g., GDP) to aggregate inputs.[1](https://en.wikipedia.org/wiki/Total_factor_productivity) Under some
> simplifications about the production technology, growth in TFP becomes
> the portion of growth in output not explained by growth in
> traditionally measured inputs of labour and capital used in
> production.

<https://en.wikipedia.org/wiki/Total_factor_productivity>

How can factors "not explained by growth in traditionally measured inputs of labour and capital" come to be described as "total"? Etymology, please. It would seem like "not explained" implies "complements" and "complementary" so CFP sounds better than TFP.

**Addendum**... It turns out that TFP has another name... the "Solow residual". A quote [from the Economist on 2022 May 7](https://www.economist.com/finance-and-economics/2022/05/07/why-long-term-economic-growth-often-disappoints).

> Statistical techniques that try
> to measure the concept of “knowledge” typically bundle all the
> variation in growth that cannot be explained by changes in the
> workforce or investment into the black box. Hence TFP’s other, less
> flattering name—the “Solow residual”. Rather than a reliable metric of
> society’s level of knowledge, TFP so far seems to remain, in the words
> of a Solow critic, a “measure of our ignorance”.

**Tags:** productivity

> **Comments:**
> **username_1**: Why the unimaginative effortless downvoting without some constructive comment?  

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## 1 answers

### Answer by username_2 on 2021-01-26. Score: 4 | Accepted answer

It is total because it takes into account all output per all inputs - hence it is the total productivity of all factors.

Total factor productivity as that excerpt from Wikipedia states is given as:

$$TFP=\frac{\text{GDP}}{\text{All Factors}}$$

that is where the total comes from. In practice, the factors used in denominator are capital and labor, but they are measured very broadly to include other factors (e.g. human capital will often be 'hidden' in the labor variable). However, this being said some factors are very hard to measure (e.g. some economists consider entrepreneurship a factor of production), this is why some economists prefer to call it multifactor productivity (i.e. it is productivity of multiple factors but not all), as mentioned in the [OECD glossary](https://stats.oecd.org/glossary/detail.asp?ID=3091). However, it has nothing to do with complementarity which in economics has completely different meaning than what you imply in the question so CFP would make no sense.

Also, the passage you cite as reason for your confusion is actually **not** about total factor productivity but about **growth** in total factor productivity, i.e. not TFP but $\Delta$TFP. Those are two different variables in the same way as GDP and *growth* rate of GDP are not the same.

The idea here is simple, if output (GDP) grows, but all factors remain same, that means that the productivity of all the factors used must have increased. However, in real life things usually don't remain constant so you will observe that quantity of inputs economy uses increases over time, but if output increases even faster that has the same implication as the case when inputs remain constant and output grows, namely it means productivity of all those factors is increasing.


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