AI's Economic Impact: Insights from Daron Acemoglu

Published Date : 26/02/2025 

Despite the hype surrounding artificial intelligence, its economic effects are still uncertain. Nobel laureate Daron Acemoglu provides insights on the potential and challenges of AI in the workforce and the economy. 

For all the talk about artificial intelligence (AI) upending the world, its economic effects remain uncertain.

However, Institute Professor and 2024 Nobel winner Daron Acemoglu has some valuable insights on the matter.

Despite some predictions that AI will double US GDP growth, Acemoglu expects a more modest impact.

Acemoglu anticipates that AI will increase GDP by 1.1% to 1.6% over the next 10 years, with an annual gain in productivity of roughly 0.05%.

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.”

While Acemoglu believes AI has more potential, he is concerned that AI companies have so far 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.

However, he acknowledges that complementary uses of AI will not appear by themselves unless the industry devotes significant energy and time to them.

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 a measured pace, Acemoglu also thinks that if the cycle of “hype” around AI diminishes, 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, the less likely it is that a course correction can be made.

It’s very difficult, if you’re driving 200 miles an hour, to make a 180-degree turn.” 

Frequently Asked Questions (FAQS):

Q: What is the expected impact of AI on US GDP, according to Daron Acemoglu?

A: Daron Acemoglu expects AI to increase US GDP by 1.1% to 1.6% over the next 10 years, with a roughly 0.05% annual gain in productivity.

Q: Which types of jobs are most likely to be impacted by AI, according to Acemoglu?

A: Acemoglu believes that AI will impact office jobs involving data summary, visual matching, and pattern recognition, which are about 5% of the economy.

Q: What is Daron Acemoglu's concern regarding the current direction of AI development?

A: Acemoglu is concerned that AI companies are focusing on innovations that replace human workers rather than those that increase productivity and provide expertise.

Q: Why does Acemoglu believe it's important to adopt AI more slowly?

A: Acemoglu thinks that a slower adoption of AI, possibly through government regulation or a reduction in hype, will allow for better course correction and more beneficial innovations.

Q: How does hype around AI affect its development and adoption?

A: According to Acemoglu, the hype around AI is making us invest poorly in the technology, making it harder to make necessary course corrections and leading to a rush that may not benefit workers. 

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