Economic policy vets see risks in AI overreliance
· Axios
Harvard economist Jason Furman told Axios that if he were to return to his old job as chairman of the White House Council of Economic Advisers today, he would rely on AI tools over staff economists for much of the council's day-to-day analytical work.
The big picture: Unsurprisingly, this made some waves in the online discourse, particularly the loose-knit community formerly known as Econ Twitter.
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- Many veterans of the economic policy trenches see real risks in future policymakers becoming overly reliant on AI — or at a minimum think that Furman is underestimating the importance of human economists in advising the nation's leaders.
What they're saying: "CEA work, at least in my experience, is highly bespoke as you're explaining the data flow (and much else) to very busy people who don't want only market-shop analysis," Jared Bernstein, the CEA chair under President Biden, wrote on Substack.
- "Yes, they want and need that — what will the markets make of this CPI, jobs, GDP, etc. report — but more so they want to know how this report fits into our narrative, our agenda, the president's trip today to Iowa."
- He adds that within a White House, "the human skill of reading-the-room is paramount. I'm far from an AI expert, but my sense is it sucks at that and probably always will, a conclusion that derives in no small part from listening to its creators!"
Zoom in: Claudia Sahm, a former Federal Reserve economist, raised an issue that we've often heard from senior people in fields like consulting and investment banking: If you get rid of junior positions, where will future senior leaders come from?
- Furman's staff "went on to found the Yale Budget Lab, run Treasury economic policy and a Fed institute, serve in later [administrations], and publish research on trade, environment, and taxes. That's what '20 staff' become," she wrote on X. "No model does that."
- Bloomberg chief U.S. economist Anna Wong argues that the "ability to now not depend on anyone, as a senior person, is very, very empowering. Now, with just the idea, a senior person can go far."
Zoom out: "Entering into sci fi speculation," Wong wrote on X, "as humans [we're] not about to replace the aging experts due to low pipeline of young human experts, AI themselves, through the training over the years, became the one spawning the ideas."
- "That seems like a disaster waiting to happen that current social policy needs to address."
Yes, but: Casey Mulligan, who served in President Trump's first-term CEA and now as chief economist at the Department of Health and Human Services, said that the implications of AI for human labor in policymaking are not so obvious.
- "I built AI tools at two federal offices," Mulligan wrote on X. "Able to do economic research better and more quickly, we needed more economists rather than fewer due to the added demand for what we do. This pattern is also evident in the small business sector."
- This concept — that labor-saving tools can actually increase demand for labor — is known as Jevons Paradox.
The bottom line: "Be the labor-augmenting technological change you want to see in the world," wrote Stanford economist Neale Mahoney.
- "It's on us olders to build organizations where people and AI complement each other, and to prepare the youngers for a world with better and better AI," he adds.