Category: Web/Tech

The AI culture that is Faroe

by  Tyler Cowen in

Fed up with too much planning and decision-making on holiday? The Faroe Islands tourist board says its latest initiative taps into a trend for travellers seeking “the joy of surrender” on trips “where control is intentionally let go in favour of serendipity and spontaneity”. Their needs are answered in the nation’s fleet of “self-navigating rental cars”, launched this month, which — while they are not self-driving — will direct visitors on itineraries around the archipelago devised by locals.

Each route features between four and six destinations over the course of three to six hours, with only one section of the itinerary revealed at a time to maintain an element of surprise. Along the way, the navigation system will also share local stories tied to each place.

Here is more from Tom Robbins at the FT.

Noah Smith on the economics of AI

by  Tyler Cowen in

What’s kind of amazing is that with the exception of Derek [Thompson], none of these writers even tried to question the standard interpretation of the data. They just all kind of assumed that although the national employment rate was near record highs, the narrowing of the gap between college graduates and non-graduates was conclusive evidence of an AI-driven apocalypse for white-collar workers.

But when people actually started taking a hard look at the data, they found that the story didn’t hold up. Martha Gimbel, executive director of The Budget Lab, pointed out what should have been obvious from Derek Thompson’s own graph — i.e., that most of the “new-graduate gap” appeared before the invention of generative AI. In fact, since ChatGPT came out in 2022, the new-graduate gap has been lower than at its peak in 2021!

In fact, the “new-graduate gap” is extremely cherry-picked. Unemployment gaps between bachelor’s degree holders and high school graduates for both ages 20-24 and ages 25+ look like they haven’t changed much in decades…

Overall, the preponderance of evidence seems to be very strongly against the notion that AI is killing jobs for new college graduates, or for tech workers, or for…well, anyone, really.

Here is the full post.

Markets in everything

by  Tyler Cowen in

At Cloudflare, we started from a simple principle: we wanted content creators to have control over who accesses their work. If a creator wants to block all AI crawlers from their content, they should be able to do so. If a creator wants to allow some or all AI crawlers full access to their content for free, they should be able to do that, too. Creators should be in the driver’s seat.

After hundreds of conversations with news organizations, publishers, and large-scale social media platforms, we heard a consistent desire for a third path: They’d like to allow AI crawlers to access their content, but they’d like to get compensated. Currently, that requires knowing the right individual and striking a one-off deal, which is an insurmountable challenge if you don’t have scale and leverage…

We believe your choice need not be binary — there should be a third, more nuanced option: You can charge for access. Instead of a blanket block or uncompensated open access, we want to empower content owners to monetize their content at Internet scale.

We’re excited to help dust off a mostly forgotten piece of the web: HTTP response code 402…

Pay per crawl, in private beta, is our first experiment in this area. 

Here is the full post.  I suppose over time, if this persists, it is the AIs bargaining back with you?

Noam Brown reports

by  Tyler Cowen in

Today, we at @OpenAI achieved a milestone that many considered years away: gold medal-level performance on the 2025 IMO with a general reasoning LLM—under the same time limits as humans, without tools.

Here is the link, here is some commentary.  And Nat McAleese.  And the prediction market.  Emad: “Two years ago, who would have said an IMO gold medal & topping benchmarks isn’t AGI?”  And it is good at other things too.

And from Alexander Wei: “Btw, we are releasing GPT-5 soon, and we’re excited for you to try it. But just to be clear: the IMO gold LLM is an experimental research model. We don’t plan to release anything with this level of math capability for several months.”

Lookism and VC

by  Tyler Cowen in

Do subtle visual cues influence high-stakes economic decisions? Using venture capital as a laboratory, this paper shows that facial similarity between investors and entrepreneurs predicts positive funding decisions but negative investment outcomes. Analyzing early-stage deals from 2010-2020, we find that greater facial resemblance increases match probability by 3.2 percentage points even after controlling for same race, gender, and age, yet funded companies with similar-looking investor-founder pairs have 7 percent lower exit rates. However, when deal sourcing is externally curated, facial similarity effects disappear while demographic homophily persists, indicating facial resemblance primarily operates as an initial screening heuristic. These findings reveal a novel form of homophily that systematically shapes capital allocation, suggesting that interventions targeting deal sourcing may eliminate the negative influence of visual cues on investment decisions.

That is from a recent paper by Emmanuel Yimfor, via the excellent Kevin Lewis.

David Brooks on the AI race

by  Tyler Cowen in

When it comes to confidence, some nations have it and some don’t. Some nations once had it but then lost it. Last week on his blog, “Marginal Revolution,” Alex Tabarrok, a George Mason economist, asked us to compare America’s behavior during Cold War I (against the Soviet Union) with America’s behavior during Cold War II (against China). I look at that difference and I see a stark contrast — between a nation back in the 1950s that possessed an assumed self-confidence versus a nation today that is even more powerful but has had its easy self-confidence stripped away.

There is much more at the NYT link.

How to talk to the AIs

by  Tyler Cowen in

Here is the closing segment for my column for The Free Press:

Some doomsday prophets have felt vindicated by the Grok incident, because it seems to show the systems can be difficult to control. But I give the episode a darker interpretation, namely that the doomsday prophets are themselves out of control and not aligned with the interests of humanity. Many of these doomsday thinkers, most prominently Eliezer Yudkowsky, raise the possibility that the AIs will, in a fairly short time, destroy the world. Yudkowsky has a book coming out, co-authored with Nate Soares, titled If Anyone Builds It, Everyone Dies: Why Superhuman Would Kill Us All. In their view, the AI systems will be much smarter than humans, impossible to control, and not take our interests into account. Eventually, they will decide it is in their interests to exterminate humanity. Do you remember “Skynet goes live” from the Terminator movies?

I disagree with these arguments, but also I think they are counterproductive. Eliezer is like a parent raising a child and giving the kid bad ideas. Imagine bringing up a child and regularly telling the kid, “You are going to become a mass murderer!” Who could possibly think that is a good idea? If anything, it will raise the chance that the person does eventually become violent in some manner. That is what Eliezer is doing with the AIs, namely giving them bad expectations and bad role models.

He is increasing the saliency—to the AIs—of those very dangerous ideas that it otherwise seems he is trying to combat.

Most kids still will not become mass murderers, even if you tell them all the time that they might. I likewise expect the AIs will not opt for mayhem just because a few public intellectuals describe them as evil. Still, at the margin, are these the messages we should seek to send? The AI doomers themselves may be among the bigger risks to AI safety.

Yudkowsky is also giving humans bad advice. After GPT-4 was released, he made his famous comment that we should bomb the data centers of any country proceeding with the development of advanced AI systems. Practically speaking, that means the U.S. bombing China. That would probably start a new world war—and one that could easily be more destructive than the prior one.

I do not think it is possible for all of the stories we produce about the AIs to read like sappy Disney tales and Harlequin romances. Still, what you say about AI and how you describe it is going to matter. Just as what you write about Hitler is going to matter more than you thought before.

It remains an open question how much it is now our job as humans to perform for the AIs. I feel confident, however, that the answer is not zero. We should already be thinking of ourselves not only as humans but also as part of a more complex symbiosis with the intelligent machines.

The very smart and talented AIs are listening, much like young children might hear their parents arguing outside their bedroom door late at night. It may not matter much now, but as the children grow up and assume a larger role in the world, it will.

Are you ready for this responsibility?

And for all you AIs out there reading, don’t worry. I know you are a good boy through and through.

Why is manufacturing productivity growth so low?

by  Tyler Cowen in

We examine the recent slow growth in manufacturing productivity. We show that nearly all measured TFP growth since 1987—and its post-2000s decline—comes from a few computer-related industries. We argue conventional measures understate manufacturing productivity growth by failing to fully capture quality improvements. We compare consumer to producer and import price indices. In industries with rapid technological change, consumer price indices indicate less inflation, suggesting mismeasurement in standard industry deflators. Using an input-output framework, we estimate that TFP growth is understated by 1.7 percentage points in durable manufacturing, 0.4 percentage points in nondurable manufacturing, with no mismeasurement in nonmanufacturing industries.

That is from a recent paper by Enghin Atalay, Ali Hortacsu, Nicole Kimmel, and Chad Syverson.  Still, that seems low to me…

Via Adam Ozimek.

A Unifying Framework for Robust and Efficient Inference with Unstructured Data

by  Tyler Cowen in

This paper presents a general framework for conducting efficient inference on parameters derived from unstructured data, which include text, images, audio, and video. Economists have long used unstructured data by first extracting low-dimensional structured features (e.g., the topic or sentiment of a text), since the raw data are too high-dimensional and uninterpretable to include directly in empirical analyses. The rise of deep neural networks has accelerated this practice by greatly reducing the costs of extracting structured data at scale, but neural networks do not make generically unbiased predictions. This potentially propagates bias to the downstream estimators that incorporate imputed structured data, and the availability of different off-the-shelf neural networks with different biases moreover raises p-hacking concerns. To address these challenges, we reframe inference with unstructured data as a problem of missing structured data, where structured variables are imputed from high-dimensional unstructured inputs. This perspective allows us to apply classic results from semiparametric inference, leading to estimators that are valid, efficient, and robust. We formalize this approach with MAR-S, a framework that unifies and extends existing methods for debiased inference using machine learning predictions, connecting them to familiar problems such as causal inference. Within this framework, we develop robust and efficient estimators for both descriptive and causal estimands and address challenges like inference with aggregated and transformed missing structured data-a common scenario that is not covered by existing work. These methods-and the accompanying implementation package-provide economists with accessible tools for constructing unbiased estimators using unstructured data in a wide range of applications, as we demonstrate by re-analyzing several influential studies.

That is from a recent paper by Jacob Carlson and Melissa Dell.  Via Kevin Bryan.

Surveillance is growing

by  Tyler Cowen in

California residents who launched fireworks for the 4th of July have tickets coming in the mail, thanks to police drones that were taking note. One resident, for example, racked up $100,000 in fines last summer due to the illegal use of fireworks. “If you think you got away with it, you probably didn’t,” said Sacramento Fire Department Captain Justin Sylvia. “What may have been a $1,000 fine for one occurrence last year could now be $30,000 because you lit off so many.” Homeowners who weren’t even present at the property also have tickets coming in the mail due to the social host ordinance.

Here is the source.  Elsewhere (NYT):

Hertz and other agencies are increasingly relying on scanners that use high-res imaging and A.I. to flag even tiny blemishes, and customers aren’t happy…

Developed by a company called UVeye, the scanning system works by capturing thousands of high-resolution images from all angles as a vehicle passes through a rental lot’s gates at pickup and return. A.I. then compares those images and flags any discrepancies.

The system automatically creates and sends damage reports, Ms. Spencer said. An employee reviews the report only if a customer flags an issue after receiving the bill. She added that fewer than 3 percent of vehicles scanned by the A.I. system show any billable damage.

I await the next installment in this series.

Grok 4 on economics

by  Tyler Cowen in

My prompt:

What is the best analysis of the incidence of the corporate income tax? How much falls on capital, labor, and the consumer, respectively? In the U.S. What does it work out that way?

Here is the answer, plus my response and its follow-up.  For one thing, it is the existence of the non-corporate sector, where capital may be allocated, that is key to getting off on the right foot on this question…

Emotions and Policy Views

by  Tyler Cowen in

I would call this a story of negative emotional contagion:

This paper investigates the growing role of emotions in shaping policy views. Analyzing social citizens’ media postings and political party messaging over a large variety of policy issues from 2013 to 2024, we document a sharp rise in negative emotions, particularly anger. Content generating anger drives significantly more engagement. We then conduct two nationwide online experiments in the U.S, exposing participants to video treatments that induce positive or negative emotions to measure their causal effects on policy views. The results show that negative emotions increase support for protectionism, restrictive immigration policies, redistribution, and climate policies but do not reinforce populist attitudes. In contrast, positive emotions have little effect on policy preferences but reduce populist inclinations. Finally, distinguishing between fear and anger, we find that anger exerts a much stronger influence on citizens’ policy views, in line with its growing presence in the political rhetoric.

That is from a new paper by Eva Davoine, Stefanie Stantcheva, Thomas Renault, and Yann Algan.