Bringing Economics & Causal Tools In

There are a lot of reasons why we should do AI evals. For many companies doing AI evals is the way to build the feedback loop into the product development lifecycle. So it is like your compass. We’re using AI evals as a compass to guide product development and also product iteration. And also, many times we need evals to function as the pass or fail gate in release decisions. Whether this product is good enough for release or whether it is good enough for experiment, evals are also used in that.

Stella Wenxing Liu, Head of Applied Science at ASU, and Eddie Landesberg, Staff Data Scientist at Google, join Hugo to talk about why AI evaluation is evolving from “vibe checks” into a rigorous, multi-disciplinary science and how causal inference will take AI evals to the next level in 2026.

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They Discuss:

* Team-Centric AI Evals, integrating product managers, data scientists, and SMEs under a “benevolent dictator” (or not!) to ensure comprehensive and effective evaluation;

* Custom Evaluation Metrics, moving beyond generic vendor metrics to analyze raw data and identify specific failure modes, avoiding generic product outcomes;

* AI as Policy Evaluation, framing AI evaluation as a causal inference problem to estimate counterfactual performance of new “policies” (prompts, models) and predict online AB test outcomes;

* Clear Product Constraints, defining what an AI product should not do with strict guardrails to prevent misuse, control costs, and avoid brand dilution;

* Calibrated LLM Judges, statistically aligning LLM-as-a-judge with human experts using causal inference to ensure valid proxies for human welfare and business objectives;

* Essential Data Curiosity, fostering a culture of manual data inspection to build intuition before relying on automated error analysis or agents, ensuring effective system design;

* Statistical AI Evaluation, shifting from unit-test thinking to non-deterministic distributions, using confidence intervals and power analysis to discern genuine improvements from statistical noise;

* Proactive Regulatory Compliance, developing rigorous, defensible internal evaluation standards now to gain a competitive advantage as vague AI regulations move towards enforced compliance;

* Human-Centric Benchmarking, grounding AI systems in human judgment and user values, moving beyond automated scores to build resilient and differentiated AI.

You can also find the full episode on Spotify, Apple Podcasts, and YouTube.

You can also interact directly with the transcript here in NotebookLM: If you do so, let us know anything you find in the comments!

👉 Stella has just started teaching a cohort of her AI Evals and Analytics Playbook course starting this week. She’s kindly giving listeners of Vanishing Gradients 30% off with this link.👈

Our flagship course Building AI Applications just wrapped its final cohort but we’re cooking up something new. If you want to be first to hear about it (and help shape what we build), drop your thoughts here.

LINKS

* Stella Wenxing Liu on LinkedIn

* Eddie Landesberg on LinkedIn

* Stella’s AI Evals & Analytics Playbook course on Maven (30% community discount)

* CJE (Causal Judge Evaluation) package by Eddie

* Trillion Dollar Coach

* Goodhart’s Law

* Upcoming Events on Luma

* Vanishing Gradients on YouTube

* Watch the podcast video on YouTube

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