How Economists View the Rise of Artificial Intelligence

Machine learning will drop the cost of making predictions, but raise the value of human judgement.
To really understand the impact of artificial intelligence in the modern world, it’s best to think beyond the mega-research projects like those that helped Google recognize cats in photos.

According to professor Ajay Agrawal of the University of Toronto, humanity should be pondering how the ability of cutting edge A.I. techniques like deep learning—which has boosted the ability for computers to recognize patterns in enormous loads of data—could reshape the global economy.

However, one group of people refused to call the Internet a new economy: economists. For them, the Internet didn’t usher in a new economy per se, instead it simply altered the existing economy by introducing a new way to purchase goods like shoes or toothbrushes at a cheaper rate than brick-and-mortar stores offered.

“Economists think of technology as drops in the cost of particular things,” Agrawal said.

Likewise, the advent of calculators or rudimentary computers lowered the cost for people to perform basic arithmetic, which aided workers at the census bureau who previously slaved away for hours manually crunching data without the help of those tools.

Similarly, with the rise of digital cameras, improvements in software and hardware helped manufacturers run better internal calculations within the device that could help users capture and improve their digital photos. Researchers essentially applied calculations to the old-school field of photography, something previous generations probably never believed would be touched by math, he explained.

As people “we shifted to an arithmetic solution” to help improve digital cameras, but their cost went up as more people wanted them, as opposed to traditional film cameras that require film and chemical baths to produce good photos, he added. “Those went down,” said Agrawal, in terms of both cost and want.

All this takes us back to the rise of machine learning and its ability to learn from data and make predictions based on the information.

The rise of machine learning will lead to “a drop in the cost of prediction,” he said. However, this drop will result in certain other things to go up in value, he explained.

For example, a doctor that works on a patient with a hurt leg will probably have to take an x-ray of the limb and ask questions to gather information so that he or she can make a prediction on what to do next. Advanced data analytics, however, would presumably make it easier to predict the best course of remedy for the doctor, but it will be up for the doctor to follow through or not.

So while “machine intelligence is a substitute for human prediction,” it can also be “a compliment to human judgment, so the value of human judgment increases,” Agrawal said.

In some ways, Agrawal’s comments call to mind a recent research paper in which researchers developed an A.I. system that could predict 79% of the time the correct outcome of roughly 600 human rights cases by the European Court of Human Rights. The report’s authors explained that while the tool could help discover patterns in the court cases, “they do not believe AI will be able to replace human judgement,” as reported by the Verge.

The authors of that research paper don’t want A.I. powered computers to replace humans as new, futuristic cyber judges. Instead, they want the tool to help humans to make more thoughtful judgements that can ultimately improve human rights.



  1. Martin RayalaOctober 30, 2016

    Here's a line of thinking I have been pursuing for over ten years. It started before 2005 when Ray Kurzweil published "The Singularity is Near" (which is also a movie now). Kurzweil describes what he calls the law of accelerating returns which predicts an exponential increase in technologies like computers, genetics, nanotechnology, robotics and artificial intelligence that will lead to a technological singularity in the year 2045, a point where progress is so rapid it outstrips humans' ability to comprehend it.
    Kurzweil predicts the technological advances will irreversibly transform people as they augment their minds and bodies with genetic alterations, nanotechnology, and artificial intelligence. Once the Singularity has been reached, Kurzweil says that machine intelligence will be infinitely more powerful than all human intelligence combined (Wikipedia).
    Others are saying that even before that Singularity there will be a level of disruptive changes and behavioral shifts as we use artificial intelligence to increase human capacity through augmentation, simulation and emulation ("The Age of Em").
    This will lead to "The Economic Singularity" in which the world will need to develop new economic systems when much of the work being done by people today will be done by machines and new jobs as we think of them will not be created in sufficient numbers.
    This then leads to ideas like "The Purpose Economy" where we will examine new ways of making a living that build on our own desires to have a meaningful impact, experience personal growth, and enrich our relationships with others. This leads to a growing number of people talking about finding meaning in life beyond work

  2. Julie GrintOctober 30, 2016

    Artificial Intelligence (AI) will create tremendous wealth for society, but will leave many people without jobs.
    Unlike the industrial revolution, there may not be jobs for large segments of society as machines may be better at every possible job. There will not be a flood of replacement “AI repair person” jobs to take up the slack. So the real challenge will be how to properly assist those, most of us humans, who are displaced by AI and robots. Another issue will be the fact that people will not look after one another as machines permanently displace entire classes of labour, such as low level healthcare workers.
    Fortunately, governments may prove more level-headed than tech celebrities if they choose to listen to nuanced advice. A recent report by the UK’s House of Commons Science and Technology Committee on the risks of AI, for example, focuses on economic, social and ethical concerns of replacing human labour with robots.
    The take-home message was that AI will make industry more efficient, but may also destabilise society. If we are going to worry about the future of humanity we should focus on the real challenges, such as climate change and weapons of mass destruction rather than fanciful killer AI robots.