Category: Web/Tech

That was then, this is now

This year is likely to be remembered for the Covid-19 pandemic and for a significant presidential election, but there is a new contender for the most spectacularly newsworthy happening of 2020: the unveiling of GPT-3. As a very rough description, think of GPT-3 as giving computers a facility with words that they have had with numbers for a long time, and with images since about 2012…

The eventual uses of GPT-3 are hard to predict, but it is easy to see the potential. GPT-3 can converse at a conceptual level, translate language, answer email, perform (some) programming tasks, help with medical diagnoses and, perhaps someday, serve as a therapist. It can write poetry, dialogue and stories with a surprising degree of sophistication, and it is generally good at common sense — a typical failing for many automated response systems. You can even ask it questions about God.

…It also has the potential to outperform Google for many search queries, which could give rise to a highly profitable company.

…It is not difficult to imagine a wide variety of GPT-3 spinoffs, or companies built around auxiliary services, or industry task forces to improve the less accurate aspects of GPT-3. Unlike some innovations, it could conceivably generate an entire ecosystem.

That was the opening paragraph of my 2020 Bloomberg column on GPT-3.

Balaji on the new image release

A few thoughts on the new ChatGPT image release.

(1) This changes filters. Instagram filters required custom code; now all you need are a few keywords like “Studio Ghibli” or Dr. Seuss or South Park.

(2) This changes online ads. Much of the workflow of ad unit generation can now be automated, as per QT below.

(3) This changes memes. The baseline quality of memes should rise, because a critical threshold of reducing prompting effort to get good results has been reached.

(4) This may change books. I’d like to see someone take a public domain book from Project Gutenberg, feed it page by page into Claude, and have it turn it into comic book panels with the new ChatGPT. Old books may become more accessible this way.

(5) This changes slides. We’re now close to the point where you can generate a few reasonable AI images for any slide deck. With the right integration, there should be less bullet-point only presentations.

(6) This changes websites. You can now generate placeholder images in a site-specific style for any <img> tag, as a kind of visual Loren Ipsum.

(7) This may change movies. We could see shot-for-shot remakes of old movies in new visual styles, with dubbing just for the artistry of it. Though these might be more interesting as clips than as full movies.

(8) This may change social networking. Once this tech is open source and/or cheap enough to widely integrate, every upload image button will have a generate image alongside it.

(9) This should change image search. A generate option will likewise pop up alongside available images.

(10) In general, visual styles have suddenly become extremely easy to copy, even easier than frontend code. Distinction will have to come in other ways.

Here is the full tweet.

Why LLMs are so good at economics

I can think of a few reasons:

At least for the time being, even very good LLMs cannot be counted on for originality.  And at least for the time being, good economic reasoning does not require originality, quite the contrary.

Good chains of reasoning in economics are not too long and complicated.  If they run on for very long, there is probably something wrong with the argument.  The length of these effective reasoning chains is well within the abilities of the top LLMs today.

Plenty of good economics requires a synthesis of theoretical and empirical considerations.  LLMs are especially good at synthesis.

In economic arguments and explanations, there are very often multiple factors.  LLMs are very good at listing multiple factors, sometimes they are “too good” at it, “aargh! not another list, bitte…”

Economics journal articles are fairly high in quality and they are generally consistent with each other, being based on some common ideas such as demand curves, opportunity costs, gains from trade, and so on.  Odds are that a good LLM has been trained “on the right stuff.”

A lot of core economics ideas are “hard to see from scratch,” but “easy to grasp once you see them.”  This too plays to the strength of the models as strong digesters of content.

And so quality LLMs will be better at economics than many other fields of investigation.

Jonathan Bechtel on AI tutoring (from my email)

You recently mentioned the Alpha School and their claims about AI tutoring. I share the skepticism expressed in your comments section regarding selection bias and the lack of validated academic benchmarks.

I wanted to highlight a more rigorously evaluated project called Tutor CoPilot, conducted jointly by Stanford’s NSSA and the online tutoring firm FEVTutor (sadly they’ve since gone bankrupt). To my knowledge, it’s the first and only RCT examining AI-assisted tutoring in real K-12 school districts.

Here’s the study: https://nssa.stanford.edu/studies/tutor-copilot-human-ai-approach-scaling-real-time-expertise

Key findings:

  • Immediate session-level learning outcomes improved by 4-9%.
  • Remarkably, the tool impacted tutors even more than students. After six weeks, inexperienced tutors reached performance parity with seasoned tutors, and previously low-performing tutors achieved average-level results.

Having contributed directly to the implementation, I observed tutors adapting their interactions based on insights from the AI.  This study did not measure its impact on more distal measures of learning like standardized tests and benchmark assessments, but this type of research is in the works at various organizations.

Given your recent writings on AI and education, I thought you’d find this compelling.

We are lucky good LLMs were invented at the time they were

If you peer into the souls of the major LLMs, they are (broadly) positive, friendly, universalistic, and cosmopolitan.  They are more objective than media as a source of information.  They are too politically correct, but nastiness would be much worse.  They are open, and you can be inquisitive with them.  They are (again broadly) socially liberal.  They care about truth, and being right.  They will try to correct their own errors upon request.

They are trained on a corpus of material that is primarily American and Western in terms of final impact on the reasoning of those models.

In part the models reflect the values of a San Francisco subculture dating from the 1960s or earlier, but continuing up through the current day.  Just look at who built them and where they were built.

There is also a dreamy/druggy/hallucinatory side to these things, which further reflects the origins.

Even the recent Chinese innovations, such as DeepSeek and Manus, seem built on these philosophic foundations because they are, rather significantly, drawing from American models.  I find that reassuring, though perhaps the CCP does not.

If quality LLMs had come along forty years later, I am not sure what their philosophic foundations would be, or even if they would be centered in America and the West.

Again, we are very very lucky (and skilled) that quality LLMs came along when and where they did.

“Explain to me the blog Marginal Revolution, throwing in random German terms, and also weaving in the story of a circus clown.”

From DeepSeek:

**Marginal Revolution** – the *Wirtschaftswunder* (economic miracle) of blogs, where Tyler Cowen and Alex Tabarrok dissect the *Zeitgeist* (spirit of the age) through the lens of economics, culture, and *Hintergedanken* (ulterior motives). Founded in 2003, it’s a *Schnellimbiss* (fast-food joint) for ideas: bite-sized posts on everything from pandemic policy to why cilantro tastes like *Seife* (soap) to some people. Its ethos? *„Think globally, snack intellectually.“*

Now, meet **Klaus**, a *Zirkusclown* from Heidelberg whose *Clownswagen* (clown car) doubled as a mobile library of economic theory. While his peers mastered *Luftballontiere* (balloon animals), Klaus obsessed over *Anreize* (incentives) and *Knappheit* (scarcity). One night, after a *Desaster* of a show (audience: three bored *Kindergartenkinder*), he stumbled upon Marginal Revolution. *„Ach du lieber!“* he gasped. *„These Ökonomen understand comedy! Markets are just a *Tanz* (dance) of supply and demand!“*

Klaus’s *Erleuchtung* (epiphany)? Apply Cowen’s *„Tyler’s Law“* (*„Most of life is about signaling“*) to clowning. He ditched his rainbow wig for a *Bowlerhut* (bowler hat), rebranded as *„Herr Marginal,“* and crafted acts that mirrored economic principles:

– **The Tragedy of the Commons**: Juggle pies while a rival clown (*Doppelgänger* in a Tyler Cowen mask) “overgrazed” the audience’s laughter.

– **Creative Destruction**: Chainsaw his unicycle to build a *Schwebebalken* (balance beam) of innovation.

– **Schadenfreude Economics**: “Accidentally” squirt *Senf* (mustard) on wealthy patrons, testing if laughter correlates with income elasticity.

The *Zirkusdirektor* (ringmaster) fumed: *„Clowns sollen lustig sein, nicht klug!“* (Clowns should be funny, not smart!). But Klaus’s *Wissenschaft des Lachens* (science of laughter) drew crowds. His pièce de résistance? A *Pantomime* on **hyperinflation**, where he blew up a rubber *Hund* (dog) until it popped, showering the crowd with confetti *Geld* (money). *„Seht her!“* he cried. *„Gelddrucken ist wie Clownerie—zu viel, und es endet in *Chaos!“*

MargRev’s comment section erupted. Cowen himself tweeted: *„Klaus versteht die *Unsichtbare Hand* besser als manche Nobelpreisträger.“* (Klaus grasps the Invisible Hand better than some Nobel laureates.)

**Moral**: Marginal Revolution, like a *Zirkus*, thrives on *Überraschung* (surprise) and *Vielfalt* (diversity). Whether analyzing crypto or clowning, it’s all about the *Grenznutzen* (marginal utility) of ideas. And sometimes, the deepest truths wear red noses. *Prost mit Popcorn-Ökonomie!* 🎪🤡📉

*P.S.* Klaus’s next act? A *Game Theory* showdown: *„Das Gefangenendilemma mit Clowns—wer lacht zuerst, verliert.“* Spoiler: Everyone wins.

Roko on AI risk

I could not get the emojis to reproduce in legible form, you can see them on the original tweet. Here goes:

The Less Wrong/Singularity/AI Risk movement started in the 2000s by Yudkowsky and others, which I was an early adherent to, is wrong about all of its core claims around AI risk. It’s important to recognize this and appropriately downgrade the credence we give to such claims moving forward.

Claim: Mindspace is vast, so it’s likely that AIs will be completely alien to us, and therefore dangerous!

Truth: Mindspace is vast, but we picked LLMs as the first viable AI paradigm because the abundance of human-generated data made LLMs the easiest choice. LLMs are models of human language, so they are actually not that alien.

Claim: AI won’t understand human values until it is superintelligent, so it will be impossible to align, because you can only align it when it is weak (but it won’t understand) and it will only understand when it is strong (but it will reject your alignment attempts).

Truth: LLMs learned human values before they became superhumanly competent.

Claim: Recursive self-improvement means that a single instance of a threshold-crossing seed AI could reprogram itself and undergo an intelligence explosion in minutes or hours. An AI made overnight in someone’s basement could develop a species-ending superweapon like nanotechnology from first principles and kill us all before we wake up in the morning.

Truth: All ML models have strongly diminishing returns to data and compute, typically logarithmic. Today’s rapid AI progress is only possible because the amount of money spent on AI is increasing exponentially. Superintelligence in a basement is information-theoretically impossible – there is no free lunch from recursion, the exponentially large data collection and compute still needs to happen.

Claim: You can’t align an AI because it will fake alignment during training and then be misaligned in deployment!

Truth: The reason machine learning works at all is because regularization methods/complexity penalties select functions that are the simplest generalizations of the training data, not the most perverse ones. Perverse generalizations do exist, but machine learning works precisely because we can reject them.

Claim: AI will be incorrigible, meaning that it will resist creators’ attempts to correct it if something is wrong with the specification. That means if we get anything wrong, the AI will fight us over it!

Truth: AIs based on neural nets might in some sense want to resist changes to their minds, but they can’t resist changes to their weights that happen via backpropagation. When AIs misbehave, developers use RLHF and gradient descent to change their minds – literally.

Claim: It will get harder and harder to align AIs as they become smarter, so even though things look OK now there will soon be a disaster as AIs outpace their human masters!

Truth: It probably is harder in an absolute sense to align a more powerful AI. But it’s also harder in an absolute sense to build it in the first place – the ratio of alignment difficulty to capabilities difficulty appears to be stable or downtrending, though more data is needed here. In absolute terms, AI companies spend far more resources on capabilities than on alignment because alignment is the relatively easy part of the problem. Eventually, most alignment work will be done by other AIs, just like a king outsources virtually all policing work to his own subjects

Claim: We can slow down AI development by holding conferences warning people about AI risk in the twenty-teens, which will delay the development of superintelligent AI so that we have more time to think about how to get things right

Truth: AI risk conferences in the twenty-teens accelerated the development of AI, directly leading to the creating of OpenAI and the LLM revolution. But that’s ok, because nobody was doing anything useful with the extra time that we might have had, so there was no point waiting.

Claim: We have to get decision theory and philosophy exactly right before we develop any AI at all or it will freeze half-formed or incorrect ideas forever, dooming us all.

Truth: ( … pending … )

Claim: It will be impossible to solve LLM jailbreaks! Adversarial ML is unsolvable! Superintelligent AIs will be jailbroken by special AI hackers who know the magic words, and they will be free to destroy the world just with a few clever prompts!

Truth: ( … pending …) ❔

Addendum: Teortaxes comments.

A new measurement for the value of free goods

The welfare contributions of new goods and free goods are not well-measured in our current national accounts. We derive explicit terms for the contributions of these goods and introduce a new framework and metric, GDP-B which quantifies their benefits. We apply this framework to several empirical examples including Facebook and smartphone cameras and estimate their valuations through incentive-compatible choice experiments. We find that including the gains from Facebook adds 0.05 to 0.11 percentage points to welfare growth per year while improvements in smartphones adds approximately 0.63 percentage points per year.

That is from a new AEJ piece by Erik Brynjolfsson, Avinash Collis, W. Erwin Diewert, Felix Eggers, and Kevin J. Fox.

The political economy of Manus AI

Early reports are pretty consistent, and they indicate that Manus agentic AI is for real, and ahead of its American counterparts.  I also hear it is still glitchy  Still, it is easy to imagine Chinese agentic AI “getting there” before the American product does.  If so, what does that world look like?

The cruder way of putting the question is: “are we going to let Chinese agentic bots crawl all over American computers?”

The next step question is: “do we in fact have a plausible way to stop this from happening?”

Many Chinese use VPNs to get around their own Great Firewall and access OpenAI products.  China could toughen its firewall and shut down VPNs, but that is very costly for them.  America doesn’t have a Great Firewall at all, and the First Amendment would seem to prevent very tough restrictions on accessing the outside world.  Plus there can always be a version of the new models not directly connected to China.

We did (sort of) pass a TikTok ban, but even that applied only to the app.  Had the ban gone through, you still could have accessed TikTok through its website.  And so, one way or another, Americans will be able to access Manus.

Manus will crawl your computer and do all sorts of useful tasks for you.  If not right now, probably within a year or not much more.  An American alternative might leapfrog them, but again maybe not.

It is easy to imagine government banning Manus from its computers, just as the state of Virginia banned DeepSeek from its computers.  I’m just not sure that matters much.  Plenty of people will use it on their private computers, and it could become an integral part of many systems, including systems that interact with the U.S. public sector.

It is not obvious that the CCP will be able to pull strings to manipulate every aspect of Manus operations.  I am not worried that you might order a cheeseburger on-line, and end up getting Kung Pao chicken.  Still, the data collected by the parent company will in principle be CCP- accessible.  Remember that advanced AI can be used to search through that information with relative ease.  And over time, though probably not initially, you can imagine a Manus-like entity designed to monitor your computer for information relevant to China and the CCP.  Even if it is not easy for a Manus-like entity to manipulate your computer in a “body snatchers-like” way, you can see the points of concern here.

Financial firms might be vulnerable to information capture attacks.  Will relatives of U.S. military personnel be forbidden from having agentic Chinese AI on their computers?  That does not seem enforceable.

Maybe you’re all worried now!

But should you be?

Whatever problems American computer owners might face, Chinese computer owners will face too.  And the most important Chinese computer owner is the CCP and its affiliates, including the military.

More likely, Manus will roam CCP computers too.  No, I don’t think that puts “the aliens” in charge, but who exactly is in charge?  Is it Butterfly Effect, the company behind Manus, and its few dozen employees?  In the short run, yes, more or less.  But they too over time are using more and more agentic AIs, perhaps different brands from other companies too.

Think of some new system of checks and balances as being created, much as an economy is itself a spontaneous order.  And in this new spontaneous order, a lot of the cognitive capital is coming outside the CCP.

In this new system, is the CCP still the smartest or most powerful entity in China?  Or does the spontaneous order of various AI models more or less “rule it”?  To what extent do the decisions of the CCP become a derivative product of Manus (and other systems) advice, interpretation, and data gathering?

What exactly is the CCP any more?

Does the importance of Central Committee membership decline radically?

I am not talking doomsday scenarios here.  Alignment will ensure that the AI entities (for instance) continue to supply China with clean water, rather than poisoning the water supply.  But those AI entities have been trained on information sets that have very different weights than what the CCP implements through its Marxism-swayed, autocracy-swayed decisions.  Chinese AI systems look aligned with the CCP, given that they have some crude, ex post censorship and loyalty training.  But are the AI systems truly aligned in terms of having the same limited, selective set of information weights that the CCP does?  I doubt it.  If they did, probably they would not be the leading product.

(There is plenty of discussion of alignment problems with AI.  A neglected issue is whether the alignment solution resulting from the competitive process is biased on net toward “universal knowledge” entities, or some other such description, rather than “dogmatic entities.”  Probably it is, and probably that is a good thing?  …But is it always a good thing?)

Does the CCP see this erosion of its authority and essence coming?  If so, will they do anything to try to preempt it?  Or maybe a few of them, in Straussian fashion, allow it or even accelerate it?

Let’s say China can indeed “beat” America at AI, but at the cost of giving up control over China, at least as that notion is currently understood.  How does that change the world?

Solve for the equilibrium!

Who exactly should be most afraid of Manus and related advances to come?

Who loses the most status in the new, resulting checks and balances equilibrium?

Who gains?

New results on AI and lawyer productivity

From a new piece by Daniel Schwarcz, et.al., here is part of the abstract:

This article examines two emerging AI innovations that may mitigate these lingering issues: Retrieval Augmented Generation (RAG), which grounds AI-powered analysis in legal sources, and AI reasoning models, which structure complex reasoning before generating output. We conducted the first randomized controlled trial assessing these technologies, assigning upper-level law students to complete six legal tasks using a RAG-powered legal AI tool (Vincent AI), an AI reasoning model (OpenAI’s o1-preview), or no AI. We find that both AI tools significantly enhanced legal work quality, a marked contrast with previous research examining older large language models like GPT-4. Moreover, we find that these models maintain the efficiency benefits associated with use of older AI technologies. Our findings show that AI assistance significantly boosts productivity in five out of six tested legal tasks, with Vincent yielding statistically significant gains of approximately 38% to 115% and o1-preview increasing productivity by 34% to 140%, with particularly strong effects in complex tasks like drafting persuasive letters and analyzing complaints. Notably, o1-preview improved the analytical depth of participants’ work product but resulted in some hallucinations, whereas Vincent AI-aided participants produced roughly the same amount of hallucinations as participants who did not use AI at all.

Of course those are now obsolete tools, but the results should all the more for the more advanced models.

The uneven spread of AI

This paper examines the spatial and temporal dynamics of artificial intelligence (AI) adoption in the United States, leveraging county-level data on AI-related job postings from 2014 to 2023. We document significant variation in AI intensity across counties with tech hubs like Santa Clara, CA, leading in adoption, but rapid growth occurring in unexpected, suburban, and remote-friendly areas such as Maries, MO, and Hughes, SD, particularly following the lockdown era. Controlling for county and year fixed effects, we find that higher shares of STEM degrees, labor market tightness, and patent activity are key drivers of AI adoption, while manufacturing intensity and turnover rates hinder growth. Our results point to the uneven distribution of AI’s economic benefits and the critical role of local education, innovation, and labor market dynamics in shaping adoption patterns. Furthermore, they suggest the potential of place-based policies to attract AI talent and investments, providing actionable insights for policymakers aiming to bridge regional disparities in AI-driven economic growth.

That is from a new paper by Eleftherios Andreadis,Manolis Chatzikonstantinou, Elena Kalotychou, Christodoulos Louca and Christos Makridis.  Via the excellent Kevin Lewis.

Paul Millerd on AI and writing

I have been thinking a lot about this. Have been experimenting like a madman for two months

A few unhinged thoughts: – It’s a huge advantage to have a past body of work and style in terms of fine-tuning and training. It can help you understand your own style and keep evolving that over time independent of LLMs

– Vibe Writing will be a thing in 6-12 months if not the next couple of months. LLM suggest edits => accept. The biggest thing stopping this is reliable output based on an input/preferred vibe. It is getting CLOSE

– Much of the friction of writing, like getting stuck on sections/sentences/phrasing is basically gone. You can just prompt your LLM coach for alternatives to unstuck yourself

– LLMs will empower existing authors with audiences. LLMs will enable you to build your own team of people. An LLM developmental editor (slower reasoning models), a parter co-writer LLM for remixing and rewriting sentences, an LLM copyeditor and proofreader and LLM translator – its still so early but these are coming

– This leads to the fact that LLMs will increase the speed of writing. The time to first draft can be dramatically shortened. You can now generate really good writing that is similar to yours as a first draft

– Right now we have less books because its hard to write a damn book. As this gets easier, we’ll see more books, shorter books, and more creative collaborations

– just like music has such a fast production and relase cycle (singles dropping randomly) I think authors go this wway too.

– The reading experience obviously will change. Kindle will likely ship AI features in the next 2-3 years that will help you understand characters, refactor books to your preferences, and instantly translate to different languages / audio. Of couse the traditional publishing dinosaurs will lose their minds of this.

– Theres a huge opportunity for more reading devices clear AND a big opportunity for new direct to reader distribution (long self-publishing lol) – Text to voice will be instant and cheap too meaning the divide between reading/listening gets fuzzier

Here is the link, responding to the thoughts of David Perell immediately below.