Unpacking the AI-Productivity Paradox

We see the effects of transformative new technologies everywhere except in productivity statistics. Systems using artificial intelligence (AI) increasingly match or surpass human-level performance, driving great expectations and soaring stock prices. Yet measured productivity growth has declined by half over the past decade, and real income has stagnated since the late 1990s for a majority of Americans.

What can explain this paradox?

Our close examination of recent patterns in aggregate productivity growth highlights the apparent contradictions. Examples of potentially transformative new technologies that could greatly increase productivity and economic welfare abound, as noted in the 2014 book The Second Machine Age. For instance, consider the recent progress in areas such as machine image recognition (see “AI Versus Human Image Recognition Error Rates”). At the same time, productivity growth has been historically slow over the past decade.

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