The growing effect of AI on the economy, part 1

Insights from: Anton Korinek

Written by: Gosia Glinska

Newswise — Prominent tech leaders have been sounding the alarm about the potential dangers of artificial intelligence (AI) for some time. Tesla’s Elon Musk, a vocal advocate of AI safeguards, sees the technology as the “greatest risk we face as a civilization,” even calling on the government to proactively regulate AI before robots start “taking to the streets killing people”.

Economist Anton Korinek predicts a less dramatic but equally consequential scenario for humanity: super-intelligent entities – either machines or artificially enhanced humans – could command an increasing share of the economy’s scarce resources, pushing ordinary people below their subsistence level – leading to the modern version of a Malthusian catastrophe. To illuminate this possible future, Korinek, who holds joint positions in the University of Virginia’s Department of Economics and the Darden School of Business, introduced a new economic framework that explains the growing impact of AI on the world. ‘economy.


Computer systems were first designed as decision support tools. No more. “Machines and computer programs,” says Korinek, “are no longer just objects and tools. They assume more and more agency and play an independent role in the economy. They behave like artificially intelligent agents (AIA).

Artificially intelligent agents (AIA)
To be considered an intelligent agent, a computer system must have the following properties:

  • Autonomous behavior
  • The ability to sense one’s environment and other agents
  • The ability to act on one’s environment
  • Be goal oriented

Intelligent agents can also learn or use knowledge to achieve their goals.

See Michael J. Wooldridge, “Intelligent Agents,” in Weiss Gerhard (ed.) Multi-agent systems: a modern approach to distributed artificial intelligence, Cambridge, MA, MIT.

Today, machine learning algorithms drive an increasing number of business decisions. “In some sense, AI algorithms are one of the most important contributors to what a business does,” says Korinek. “They are often what makes or breaks a company and what gives it a competitive advantage. So a lot of what we used to say about employees is now true about AI algorithms.

Investment firm Vanguard, for example, uses algorithms to provide clients with investment advice, including personalized portfolio construction and tax-efficient investment selection. BP, a global oil and gas producer, runs proprietary algorithms on its supercomputer to identify elusive oil reserves.

Due to the growing ability of AIAs to act autonomously and determine an increasing number of business decisions, at least according to Korinek, they are poised to become significant players in the economy with unprecedented implications that we have not yet appreciated.


Korinek proposes that we go beyond the simplistic view of human-technology interactions in which humans have complete agency, in which they always control machines and machines do not exert influence over their users.

Traditionally, “agency” has connoted a distinctive human ability and something that, by definition, only humans possess. This anthropocentric frame of reference, according to Korinek, is precisely what prevents us from understanding the scope and significance of AI’s impact on the economy. “We have this human-centric mindset,” says Korinek, “that blinds us to what’s going on in AI these days and how easily many distinctly human skills are actually replaceable by machines.”

Because of this bias, most people only see machines as things that humans own and control. According to Korinek, we ignore the growing influence of AI on its users. “Algorithms are already manipulating humans,” says Korinek. “They tell us what to think, what to like and even how to vote.”

Take Facebook, which for many people is a primary source of news and information. Its newsfeed algorithm, designed to increase user engagement to sell more advertising, only shows content that users agree with. This can create a “filter bubble”, in which it appears to the user that most others share their views. It is now believed that this filtering may increase political polarization. As we recently learned, the News Feed algorithm may have influenced the Brexit referendum in the UK and the 2016 election in the US.


Korinek suggests that we free ourselves from the anthropocentric perspective. To better study the interactions between humans and AIAs on a symmetric basis and to understand the growing impact of AI on the economy, Korinek developed a new economic framework that describes humans and AIAs in parallel as entities focused on goals that each absorb scarce resources and contribute to the economy.

“What I’m proposing,” says Korinek, “is an evolutionary view of humanity and AI. We now have humans and machines as two different types of intelligent, agent-like entities living in symbiosis. They depend on each other and influence each other, evolving together.

Part 2 will explore Professor Korinek’s framework, examining the mechanisms that allow artificially intelligent agents (AIAs) to control resources, which can lead to either unprecedented prosperity for humans and AIAs, or an existential race. between the two.

About Anton Korinek

An expert in macroeconomics, artificial intelligence, financial stability and international finance, Korinek is currently studying the implications of AI for business, the economy and the future of work. Her work has been featured in top journals and mainstream media, including The Economist, The Wall Street Journal and Bloomberg.

In addition to being an associate professor at the Darden School of Business and the Department of Economics at UVA, Korinek is a research associate at the National Bureau of Economic Research. Prior to his AVU appointments, he held positions at the University of Maryland as well as Johns Hopkins University, and was a visiting scholar at Harvard University, the International Monetary Fund, and the World Bank. world.

MA, University of Vienna; PhD, Columbia University

About University of Virginia Darden School of Business

The University of Virginia Darden School of Business offers the world’s best business education experience to prepare entrepreneurial, global, and responsible leaders through its MBA, Ph.D., and executive education programs. Darden’s top faculty are renowned for teaching excellence and advancing practical business knowledge through research. Darden was established in 1955 at the University of Virginia, a leading public university founded by Thomas Jefferson in 1819 in Charlottesville, Virginia.

James G. Williams