MIT economist’s warning on AI: A lot of money of tech companies will go to waste

MIT economist Daron Acemoglu said that the hype surrounding Artificial Intelligence (AI) is unnecessary and may not meet its lofty expectations, asserting, “A lot of money is going to get wasted.” Only 5% of jobs may be taken over or heavily assisted by AI technologies over the next decade, he said suggesting that the economic benefits that companies are hoping for from AI may not come to fruition.

“You’re not going to get an economic revolution out of that 5%,” he said.

There are ultimately three potential scenarios for the AI story and none are particularly bullish, he said. The most optimistic scenario is that AI hype cools and some applications of the technology take hold. The AI frenzy could ultimately lead to a crash in technology stocks owing to which investors and tech executives would become disenchanted with AI leading to a “AI spring followed by AI winter”, he said.

In another scenario, the AI frenzy may last for many more years leading to companies replacing human jobs with AI technologies “without understanding what they’re going to do with it.” After this tech companies will scramble to rehire workers when they eventually realize the technology doesn’t work, he said.

A combination of the second and third scenarios as the most likely, he said, as “when the hype gets intensified, the fall is unlikely to be soft.”

Although, the MIT economist said that he is impressed by what large language models like ChatGPT can do, but they won’t replace humans in the work place for a very long time.

“You need highly reliable information or the ability of these models to faithfully implement certain steps that previously workers were doing,” he said, adding, “They can do that in a few places with some human supervisory oversight like coding, but in most places they cannot. That’s a reality check for where we are right now.”