Nobel Laureate Daron Acemoglu on the Real Economic Impact of AI
AI is often described as the next great revolution, capturing the attention of investors, technologists, and policymakers. But how much of this vision is grounded in reality, and how much is driven by hype? According to Nobel Prize-winning economist Daron Acemoglu, the answers are unclear.
Acemoglu, an MIT economist with extensive experience studying the intersection of technology and society, takes a cautious but insightful look at AI’s economic effects. His focus goes beyond what AI can do to explore what it will do—and who stands to benefit.
The Uncertain Economic Impact of AI
Despite enormous investments in AI, its long-term effects on the economy remain ambiguous. While some forecasts predict AI could double GDP growth and drive a new era of productivity, Acemoglu offers a more restrained outlook.
In his recent paper, The Simple Macroeconomics of AI, he estimates that AI might boost GDP by a modest 1.1% to 1.6% over the next decade, with annual productivity growth increasing by just 0.05%. By comparison, U.S. productivity has historically grown at about 2% per year since 1947.
“I don’t think we should belittle 0.5% over 10 years,” Acemoglu says. “But it’s disappointing compared to the promises made by the tech industry.”
The Jobs Dilemma: Where Will AI Have the Most Impact?
A key uncertainty surrounding AI is its impact on jobs. Studies, including one from OpenAI and the University of Pennsylvania, suggest that AI could affect 20% of U.S. job tasks. Acemoglu agrees that certain white-collar jobs—particularly those involving data processing and pattern recognition—are likely to experience significant changes.
“It’s going to affect office jobs that involve tasks like data summarization, visual matching, and pattern recognition,” he notes. However, he emphasizes that many roles, such as journalists, financial analysts, and HR professionals, are unlikely to be entirely transformed.
“AI isn’t going to revolutionize everything,” he adds.
Automation vs. Augmentation: A Crucial Choice
A central theme in Acemoglu’s research is how AI is currently being deployed. Is it being used to enhance worker productivity or simply to replace human labor and cut costs?
“Right now, we’re using AI too much for automation and not enough for providing expertise and support to workers,” Acemoglu argues. He highlights customer service as an example, where AI often underperforms compared to humans but remains attractive because it is cheaper.
This approach, which Acemoglu refers to as “so-so technology,” fails to deliver significant productivity improvements. Instead, it reduces job quality while saving companies money at workers’ expense.
In his book Power and Progress, co-authored with Simon Johnson, Acemoglu explores this dynamic in depth, advocating for innovations that complement workers rather than replace them. This, he argues, is key to achieving widespread economic benefits.
Lessons from the Industrial Revolution
Acemoglu draws parallels between AI and the Industrial Revolution, noting that technological advances do not automatically lead to societal benefits. In 19th-century England, it took decades of worker struggles to secure fair wages and working conditions before the gains from machinery were broadly shared.
“Wages are unlikely to rise when workers cannot push for their share of productivity growth,” he explains. Similarly, the current AI boom could deepen inequality unless deliberate efforts are made to distribute its benefits.
The Case for Slower Innovation
In a recent paper with MIT colleague Todd Lensman, Acemoglu suggests that society might benefit from a slower pace of AI adoption. Rapid innovation, while often celebrated, can exacerbate harms such as misinformation, job displacement, and behavioral manipulation.
“The faster you go, and the more hype you generate, the harder it becomes to correct course,” he warns.
Acemoglu advocates for a more deliberate approach, emphasizing the need for thoughtful regulation and realistic expectations.
Overcoming the AI Hype
Acemoglu believes that much of the current enthusiasm around AI is fueled by hype rather than tangible results. Venture capitalists and tech leaders are investing heavily in AI with visions of sweeping disruption and artificial general intelligence.
However, many of these investments prioritize automation over augmentation—a strategy Acemoglu sees as shortsighted. “The macroeconomic benefits of AI will be greater if we deliberately focus on using the technology to complement workers,” he argues.
The Road Ahead
The future economic impact of AI depends on the choices made today. Will we design technologies that empower workers, or will we prioritize cost-cutting automation? Will we adopt AI responsibly, or rush forward without addressing its challenges?
For Acemoglu, the answers lie not only in technological development but also in the policies, institutions, and priorities that guide its use. As he puts it, “AI has potential—but only if we use it wisely.”
