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Economics of Artificial Intelligence

Artificial Intelligence (AI) It’s a game changer for business, it can enable humans to work smarter and faster than ever before, and it could potentially have a significant impact on economies and the labor market. its technologies advanced rapidly over the past several years. Governments around the world responded by developing AI strategies.

Economics of Artificial Intelligence

When looking at artificial intelligence from the perspective of economics, we ask the same, single question that we ask with any technology: What does it reduce the cost of? Economists are good at taking the fun and wizardry out of technology and leaving us with this dry but illuminating question. The answer reveals why AI is so important relative to many other exciting technologies. AI can be recast as causing a drop in the cost of the first-order input into many activities in business and our lives prediction.

Diffusion of AI Machine learning uses data to make predictions. The biggest constraint on AI in many settings is the ability to acquire useful data. This creates privacy concerns. that has a direct impact on the ability of organizations to build and implement AI. Too little privacy protection means that consumers may be unwilling to participate in market transactions where their data are vulnerable. Too much privacy regulation means that firms cannot use data to innovate. While the existing empirical work does not focus on AI specifically, the evidence to date suggests that most government-mandated privacy regulation slows technology adoption and innovation, suggesting a trade-off between the right to privacy and the speed of innovation. This means that any government strategy focused on AI particularly with the aim of fostering a local AI industry should weigh the potentially conflicting interests of data producers and users, especially with respect to privacy. Perhaps more than any other regulation, rules around privacy are likely to influence the speed and direction of the application of AI in practice. 

Consequences of AI common worry about AI concerns the potential impact on jobs. If machines can do tasks normally requiring human intelligence, will there be jobs left for humans? In our view, this is the wrong question. There are plenty of horrible jobs. Furthermore, more leisure is generally considered to be a positive development, although some have raised concerns about the need to find alternate sources of meaning. The most significant long-run policy issues relating to the potential changes to the distribution of the wealth generated by the widespread use of AI. In other words, AI may increase inequality.  If AI is like other types of information technology, it is likely to be skill-based. The people who benefit most from AI will be educated people who already are doing relatively well. These people are also more likely to own the machines. Policies to address the consequences of AI for inequality relate to the social safety net. While some have floated relatively radical ideas to deal with the potential increase in inequality – such as a tax on robots and a universal basic income the AI context is not unique in weighing the costs and benefits of social programmes from progressive taxation to universal healthcare.