If AI lifts off, will living standards follow?

Champions of artificial intelligence claim it could fuel genuine economic growth. Will it?

- Tim Harford

Once artificial intelligence (AI) really gets going, how fast can the economy grow? Five per cent a year? Ten per cent? Fifty per cent? Name your number. If you want press coverage, make it a big one.

ARK Invest, an investment manager focused on disruptive innovations, has argued that 7 per cent real gross domestic product (GDP) growth is plausible. Epoch AI, a think-tank focusing on AI trends, has suggested that growth rates could exceed 20 per cent a year, once certain preconditions are met.

Other commentators are vastly more conservative - for example, Nobel laureate economist Daron Acemoglu reckons that over the next few years, AI might nudge annual growth rates up by about 0.1 percentage point. That would be nice to have, but not necessarily nice enough to notice.

INCREDIBLE GROWTH?

It's worth taking a moment to reflect on what such growth rates might mean in practice. At 7 per cent annual growth, an economy would double in size every decade, and, potentially, so might living standards. (Would the proceeds of such growth be widely shared? Another question, for another column.) In such an economy, people who became parents at the age of 30 could plausibly expect their children to grow up to be eight times richer than them. All but the most profligate governments would see their fiscal problems evaporate, the burden of the national debt vaporised by the white heat of economic growth.

Such numbers are not unprecedented: A few economies, such as those of China, Japan and South Korea, enjoyed long stretches of this sort of growth while playing catch-up with then richer societies. But to see such growth rates from the world's richest economies would be something new.