Unmeasured Consumer Surplus from AI

AI can write essays, generate code, and assist with research, but does that mean it will replace human workers? Economist Benjamin Shiller, author of AI Economics, joins show host Gene to discuss how AI may instead make human creativity and ideas even more valuable. In this conversation with Gene Tunny, they explore AI’s potential impact on jobs, productivity growth, education, and inequality, as well as the risks the technology could pose.

Gene would love to hear your thoughts on this episode. You can email him via contact@economicsexplored.com. 

About this episode’s guest: Benjamin Shiller

Benjamin Shiller is an Associate Professor of Economics at Brandeis University. His research on personalized pricing, ad-blocking, and technological change has been published in leading journals and covered in The Atlantic, The Economist, Forbes, Fortune, The Guardian, and The Washington Post.

Takeaways

1. AI may increase the value of human ideas.
   Benjamin Shiller argues that while AI is excellent at turning ideas into polished text or code, it still struggles to generate genuinely original ideas. That means creativity, judgment, and insight may become more valuable in the AI age.
2. Workers who know how to use AI will have an advantage.
   Rather than fully replacing professionals, AI may function as a “co-pilot.” Graduates who can effectively use AI tools — prompting them, checking outputs, and integrating them into workflows — could be in strong demand.
3. AI could dramatically improve education through personalised tutoring.
   Shiller highlights Bloom’s two-sigma problem, which shows that personalised tutoring can dramatically improve student outcomes. AI tutors could provide personalised learning at scale, potentially transforming education systems.
4. Productivity gains from AI may take time to appear.
   Like earlier technologies such as electricity or computers, AI may require years before its benefits show up in productivity statistics as businesses learn how to integrate it effectively.
5. 5. AI brings serious risks alongside its benefits.
   While AI could boost productivity and living standards, Shiller warns about potential downsides — including labour market disruption, social isolation from AI companionship, and the possibility of automated AI-driven warfare.

Timestamps

• 00:00 – Introduction
• 03:08 – Using AI to write a book
• 06:11 – The explosion of AI-generated content
• 15:11 – AI, jobs, and the labour market
• 21:23 – Can AI automate research?
• 25:57 – AI blind spots and the “kangaroo problem”
• 31:29 – Bloom’s two-sigma problem and AI tutors
• 37:42 – Will AI boost productivity?
• 42:30 – Inequality, regulation, and AI risks
• 49:19 – AI and the dangers of automated warfare
• 53:34 – Key takeaways and closing

Links relevant to the conversation

Benjamin Shiller’s website:

https://benjaminshiller.com/

AI Economics: How Technology Transforms Jobs, Markets, Life, & Our Future:

https://www.amazon.com/dp/B0G45MKBZT

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