The Macroeconomics of Artificial Intelligence

Economists have a poor track record of predicting the future. And Silicon Valley repeatedly cycles through hope and disappointment over the next big technology. So a healthy skepticism toward any pronouncements about how artificial intelligence (AI) will change the economy is justified. Nonetheless, there are good reasons to take seriously the growing potential of AI—systems that exhibit intelligent behavior, such as learning, reasoning, and problem-solving—to transform the economy, especially given the astonishing technical advances of the past year.

AI may affect society in a number of areas besides the economy—including national security, politics, and culture. But in this article, we focus on the implications of AI on three broad areas of macroeconomic interest: productivity growth, the labor market, and industrial concentration. AI does not have a predetermined future. It can develop in very different directions. The particular future that emerges will be a consequence of many things, including technological and policy decisions made today. For each area, we present a fork in the road: two paths that lead to very different futures for AI and the economy. In each case, the bad future is the path of least resistance. Getting to the better future will require good policy—including

• Creative policy experiments
• A set of positive goals for what society wants from AI, not just negative outcomes to be avoided
• Understanding that the technological possibilities of AI are deeply uncertain and rapidly evolving and that society must be flexible in evolving with them