Economics of Machine Learning

Thoughtful piece.   But as in all economic models,  If you accept the economics without the un intended and unknown consequences.

The Simple Economics of Machine Intelligence
by Ajay Agrawal, Joshua Gans, Avi Goldfarb

The year 1995 was heralded as the beginning of the “New Economy.” Digital communication was set to upend markets and change everything. But economists by and large didn’t buy into the hype. It wasn’t that we didn’t recognize that something changed. It was that we recognized that the old economics lens remained useful for looking at the changes taking place. The economics of the “New Economy” could be described at a high level: Digital technology would cause a reduction in the cost of search and communication. This would lead to more search, more communication, and more activities that go together with search and communication. That’s essentially what happened.

Today we are seeing similar hype about machine intelligence. But once again, as economists, we believe some simple rules apply. Technological revolutions tend to involve some important activity becoming cheap, like the cost of communication or finding information. Machine intelligence is, in its essence, a prediction technology, so the economic shift will center around a drop in the cost of prediction.

The first effect of machine intelligence will be to lower the cost of goods and services that rely on prediction. This matters because prediction is an input to a host of activities including transportation, agriculture, healthcare, energy manufacturing, and retail.  .... "