Will artificial intelligence boost productivity? Companies sure hope so. | India News

Wendy’s menu boards. Ben & Jerry’s grocery store freezers. Abercrombie & Fitch’s marketing. Many mainstays of the American customer experience are increasingly powered by artificial intelligence.
The question is whether the technology will actually make companies more efficient.
Rapid productivity improvement is the dream for both companies and economic policymakers.If output per hour holds steady, firms must either sacrifice profits or raise prices to pay for wage increases or investment projects. But when firms figure out how to produce more per working hour, it means that they can maintain or expand profits even as they pay or invest more. Economies experiencing productivity booms can experience rapid wage gains and quick growth without as much risk of rapid inflation.
But many economists and officials seem dubious that AI — especially generative AI, which is still in its infancy — has spread enough to show up in productivity data already.
Jerome Powell, the Federal Reserve chair, recently suggested that AI “may” have the potential to increase productivity growth, “but probably not in the short run.” John Williams, president of the New York Fed, has made similar remarks, specifically citing the work of Northwestern University economist Robert Gordon.
Gordon has argued that new technologies in recent years, while important, have probably not been transformative enough to give a lasting lift to productivity growth.
“The enthusiasm about large language models and ChatGPT has gone a bit overboard,” he said in an interview.
The last time productivity really picked up, in the 1990s, computer manufacturing was getting a lot more efficient at the same time that computers themselves were making everything else more efficient — allowing for a sector-spanning productivity increase. Today’s gains may be less broad, he thinks.
Other economists are more optimistic. Erik Brynjolfsson at Stanford University has bet Gordon $400 that productivity will take off this decade. His optimism is based partly on AI. He ran an experiment with it at a large call center, where it especially helped less-experienced workers, and has co-founded a company meant to teach firms how to leverage the technology.

Source link