Alex Imas on Why Economists Might Be Getting AI Wrong

The long-term impact of AI on the labor market hinges on the distinction between task-based automation and the creation of new, currently unimaginable roles. While economists traditionally view technological disruption as a catalyst for new job creation, the rapid pace of AI development challenges historical precedents, potentially outpacing the economy's ability to adapt. Alex Imas, a professor of economics and applied AI, emphasizes that job exposure depends on the complementarity of tasks rather than simple automation percentages. If AI automates routine, low-value tasks, workers may focus on high-value, human-centric activities, potentially increasing productivity and wages. However, if consumer demand remains inelastic or if AI achieves full automation of cognitive tasks, widespread displacement becomes a significant risk. Addressing this shift requires considering public policy, such as expanding capital ownership, to mitigate the social and economic consequences of rapid labor displacement.