productivity paradox
In plain wordsThe puzzle that a powerful new technology, like computers in the 1980s or AI today, can be everywhere without showing up as faster growth in how much workers produce.
The observation that rapid advances and heavy investment in a technology can coincide with slow measured growth in labor or total factor productivity. Proposed explanations include mismeasurement (benefits such as free digital services or better quality are poorly captured by output statistics); lags while firms build complementary intangible assets such as new processes, skills and organizational designs, producing a 'productivity J-curve' in which measured productivity first dips and then rises; redistribution of gains rather than their creation; and inflated expectations. For computers the paradox eased with the US productivity surge of the late 1990s. A similar gap between AI's apparent capabilities and aggregate statistics has been called the modern productivity paradox, and how long it lasts is central to debates about an AI bubbleAI bubble, n.: The worry that investors are pouring far more money into AI companies, chips and data centers than AI will earn back soon, so that prices could crash as in the dot-com bust of 2000..
Every firm says it uses AI, yet output per hour has barely moved: the productivity paradox again.
Origin
Named after economist Robert Solow's quip in a 1987 New York Times book review: 'You can see the computer age everywhere but in the productivity statistics.' Erik Brynjolfsson's 'The Productivity Paradox of Information Technology' (1993) fixed the term; Brynjolfsson, Daniel Rock and Chad Syverson applied it to AI from 2017.
Related
- general-purpose technologygeneral-purpose technology, n.: A technology, like electricity or the computer, that spreads through the whole economy, keeps improving and sparks many other inventions. Many economists think AI is one.
- AI bubbleAI bubble, n.: The worry that investors are pouring far more money into AI companies, chips and data centers than AI will earn back soon, so that prices could crash as in the dot-com bust of 2000.
- AI hypeAI hype, n.: Exaggerated claims about what AI can do or will soon do, made to attract money, attention or customers, which can mislead the public and policymakers.
- AI as normal technologyAI as normal technology, phr.: The view that AI, however important, will change society gradually, like electricity or the internet, through slow adoption by people and institutions, rather than as a sudden, uncontrollable superintelligence.
- task exposuretask exposure, n.: A measure of how much of a job's work AI could, in principle, do or speed up. High exposure means many of the job's tasks are within AI's reach, not that the job will vanish.
- Jevons paradoxJevons paradox, n.: The observation that making something more efficient can make people use more of it overall because it gets cheaper — as with coal in the 1800s, and with AI computing today.
- workslopworkslop, n.: AI-generated work that looks polished but does not actually get the job done, quietly passing the real effort to whoever receives it, who must then puzzle it out or start over.
Sources
- Brynjolfsson, E. (1993). The Productivity Paradox of Information Technology. Communications of the ACM 36(12), 66–77.
- Brynjolfsson, E., Rock, D. & Syverson, C. (2019). Artificial Intelligence and the Modern Productivity Paradox: A Clash of Expectations and Statistics. In The Economics of Artificial Intelligence: An Agenda. University of Chicago Press.
Mentioned in
AI bubbleAI bubble, n.: The worry that investors are pouring far more money into AI companies, chips and data centers than AI will earn back soon, so that prices could crash as in the dot-com bust of 2000., AI as normal technologyAI as normal technology, phr.: The view that AI, however important, will change society gradually, like electricity or the internet, through slow adoption by people and institutions, rather than as a sudden, uncontrollable superintelligence., general-purpose technologygeneral-purpose technology, n.: A technology, like electricity or the computer, that spreads through the whole economy, keeps improving and sparks many other inventions. Many economists think AI is one., hype cyclehype cycle, n.: A pattern in which excitement about a new technology rises to a peak, crashes into disappointment, then slowly recovers as the technology finds real uses., Erik BrynjolfssonErik Brynjolfsson, prop. n.: An American economist who studies how digital technology and AI change productivity and jobs, and who warns against AI built to replace people rather than to augment them.