Economist Justin Wolfers Forecasts 0.4 Percentage Point Boost in US Long-Run Growth from AGI

A recent social media post from user Rishi | ഋഷി | 🌐🗽🥥🔰🏙 indicated a growing conviction in economist Justin Wolfers' forecast that Artificial General Intelligence (AGI) could elevate the U.S. long-run economic growth rate from 2% to 2.4%. This projection highlights the potential for advanced AI to significantly reshape the nation's economic landscape over time.

"I'm increasingly convinced by @JustinWolfers's forecast of AGI pushing the US growth rate from 2% to 2.4% in the long run," Rishi stated in the tweet.

Justin Wolfers, a professor of economics and public policy at the University of Michigan, has detailed how AI could drive this growth. He suggests that even a 20% increase in the productivity of innovators, researchers, and scientists due to AI could translate into a 20% rise in the overall productivity growth rate. This seemingly modest 0.4 percentage point increase in the annual growth rate would compound significantly, leading to a substantially larger GDP over several decades.

Wolfers elaborated on the mechanisms of this potential economic uplift in a recent primer on the economics of AI. Unlike previous technological revolutions that primarily automated physical labor, AI is uniquely positioned to supercharge cognitive tasks, enhancing the efficiency of white-collar work. He noted that AI could make researchers and scientists more productive, fostering innovation and leading to the emergence of new occupations that complement the technology.

While acknowledging that the immediate impact might appear small, Wolfers distinguishes between initial productivity gains and the long-term transformative effects. He suggests that AI could eventually raise the level of GDP by approximately 10% over a decade, a more optimistic outlook than some initial models. However, he also cautions that the full potential of AI depends on factors like the speed of adoption, the reorganization of work, and critical issues such as the "ownership problem" and "competition problem" regarding who ultimately captures the economic gains.