Nobel laureate Paul Krugman dampens expectations over A.I. like ChatGPT: ‘History suggests large economic effects will take longer than many people seem to expect’

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The A.I. race is heating up, with tech giants Microsoft, Google, and Baidu among those ramping up their efforts to launch advanced chatbots after OpenAI’s ChatGPT took the world by storm.

With billions being invested in the development of cutting-edge A.I. technology, many are speculating about how it will disrupt our day-to-day lives—leading to predictions around jobs being lost to machines, calls for greater A.I. governance, and forecasts that the world will soon see the dawn of a new A.I. era.

However, one high-profile economist isn’t convinced that the A.I. being rolled out right now will have much of an impact in the immediate future.

Paul Krugman, who was awarded the Nobel Memorial Prize in Economic Sciences in 2008 and served on the Council of Economic Advisers under the Reagan administration, said in a New York Times op-ed on Friday that the rise of large language models (LLMs) like ChatGPT and Google’s Bard were unlikely to make any major economic headway just yet.

“History suggests that large economic effects from A.I. will take longer to materialize than many people currently seem to expect,” Krugman, a professor emeritus at Princeton, wrote.

He pointed out that historical innovations like the computing revolution or the electrification of industry had taken decades to have any notable impact on the economy.

Krugman also pointed to the famous 1965 theory by Gordon Moore, cofounder of Intel, which stated the number of transistors on a microchip doubles about every two years—an observation that became known as Moore’s law.

“For at least two decades after Moore’s law kicked in, America, far from experiencing a productivity boom, suffered from a protracted productivity slowdown,” he noted. “The boom kicked in only during the 1990s, and even then it was a bit disappointing.

“The lag in this economic payoff even ended up being similar in length to the lagged payoff from electrification,” he added. “Having a technology isn’t enough. You also have to figure out what to do with it.”

Krugman said in his editorial that the great economic boom that unfolded between the 1940s and 1970s was actually the result of technologies like the internal combustion engine that came into being decades earlier.

“That’s not to say that artificial intelligence won’t have huge economic impacts,” he conceded. “But history suggests that they won’t come quickly. ChatGPT and whatever follows are probably an economic story for the 2030s, not for the next few years.”

While Krugman argued that A.I. models like ChatGPT would eventually take over a significant number of tasks currently done by human beings, “nobody really knows” how big the effect of such a shift would be on society.

“Predictions about the economic impact of technology are notoriously unreliable,” he said, insisting that LLMs in their current form should not hugely affect economic projections for the next year—or even the next decade.

However, he conceded that this “doesn’t mean we should ignore the implications of a possible A.I.-driven boom…The longer-run prospects for economic growth do look better now than they did before computers began doing such good imitations of people.

“Not to put too fine a point on it, but anyone who predicts a radical acceleration of economic growth thanks to A.I.—which would lead to a large rise in tax receipts—and simultaneously predicts a future fiscal crisis unless we make drastic cuts to Medicare and Social Security isn’t making much sense,” Krugman said.

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