Solow's productivity paradox has come to haunt AI adoption

An AI boost may not show up in economic data for decades on end

- STEPHEN MIHM

AI enthusiasts, beware: predictions that the technology will suddenly boost productivity eerily echo those that had followed the introduction of computers to the workplace. Back then, we were told that the miraculous new machines would automate vast swathes of white-collar work, leading to a lean, digital-driven economy.

Fast forward 60 years, and it's more of the same. Shortly after the debut of ChatGPT in 2022, researchers at the Massachusetts Institute of Technology claimed employees would be 40% more productive than their AI-less counterparts.

These claims may prove to be no more durable than the Pollyannish predictions of the Mad Men era. A rigorous study published by the National Bureau of Economic Research in May found only a 3% boost in time saved, while other studies have shown that reliance on AI for high-level cognitive work leads to less motivated, impaired employees.

We are witnessing the makings of another 'productivity paradox,' the term coined to describe how productivity unexpectedly stagnated and, in some cases, declined during the first four decades of the information age. The bright side is that the lessons learned then might help us navigate our expectations in the present day.