A Nobel laureate on the economics of artificial intelligence

For all the talk about artificial intelligence upending the world, its economic effects remain uncertain. But Institute Professor and 2024 Nobel winner Daron Acemoglu has some insights.

Despite some predictions that AI will double US GDP growth, Acemoglu expects it to increase GDP by 1.1% to 1.6% over the next 10 years, with a roughly 0.05% annual gain in productivity. This assessment is based on recent estimates of how many jobs are affected—but his view is that the effect will be targeted.

“We’re still going to have journalists, we’re still going to have financial analysts, we’re still going to have HR employees,” he says. “It’s going to impact a bunch of office jobs that are about data summary, visual matching, pattern recognition, etc. And those are essentially about 5% of the economy.”

He does think the technology has more potential, but he’s concerned that AI companies so far have focused on innovations that could replace human workers at the expense of those that could make them more productive. “My argument is that we currently have the wrong direction for AI,” Acemoglu says. “We’re using it too much for automation and not enough for providing expertise and information to workers.”

Innovations that keep people employed should sustain growth better, he believes. But “I don’t think complementary uses of AI will miraculously appear by themselves unless the industry devotes significant energy and time to them,” he says. And even then, whether the advances benefit workers themselves is far from guaranteed.

Given this mix of benefits and drawbacks, Acemoglu and his colleagues think it may be best to adopt AI more slowly than market fundamentalists might like. While government regulation is one way to promote that measured pace, he also thinks that if the cycle of “hype” around AI diminishes, then the rush to use it “will naturally slow down.” 

“I think that hype is making us invest badly in terms of the technology,” he says.

“The faster you go, and the more hype you have, that course correction becomes less likely. It’s very difficult, if you’re driving 200 miles an hour, to make a 180-degree turn.”