AI – The Rise of Homo Economicus
AI – The Rise of Homo Economicus
Read on to see how AI bots, channeling their inner homo economicus, could shake up the way we shop and make choices.
radical Insights
Sometime during my first weeks of enrolling in my economics master’s at the venerable University of Cologne, I found myself sitting in an auditorium listening to the dean of the economics department. After his opening salvo, telling us that more than 50% of us won’t make it through the program (you just have to love a good motivational speech by a German professor), he went on to tell us that for the next two years, we will study “homo economicus.”
Homo economicus, or “economic man,” is a theoretical concept in economics that portrays humans as consistently rational and narrowly self-interested agents who usually pursue their subjectively-defined ends optimally. I distinctly remember sitting on an uncomfortable wooden bench, which so many of my predecessors have sat on, and shaking my head: Since when are human beings “rational” in their decision-making?
This sobering moment of understanding what we will be studying led me to delve into the fields of psychology and sociology to augment my understanding of economics and human behavior in the growing field of behavioral economics.
Since then, the field has made huge strides, received two Nobel prizes (2002 for Daniel Kahneman and 2017 for Richard Thaler), and, in large part due to popularization through books such as “Influence,” “Nudge,” “Thinking Fast and Slow,” or “The Power of Habit.” And with that, homo economicus went the way of homo neanderthalensis, the Neanderthal man – pushed aside by a superior species, homo sapiens.
And all of this might just change – and homo economicus gets his spot in the limelight.
One of the more recent, exciting, and fairly hyped developments in AI is the advent of smart agents or bots – generative AI systems that can take instructions given in plain English (or whatever language you speak), carry out research, and then execute autonomously on your behalf. The classic example being flight tickets: Instead of you going to Google Flight or Kayak to find the best flights, then clicking through to the airline’s website and purchasing your tickets, an AI bot one (not too distant day) will be able to execute that search query for you, figure out the ideal flight based on your preferences, and finally book it for you.
Bill Gates, at a conference in San Francisco, summarized this as follows: “[…] you’ll never go to a search site again. You’ll never go to a productivity tool again. You’ll never go to Amazon again. Everything will be mediated through your agent.”
And this is where it gets interesting: A bot will (hopefully) make its decisions not based on some irrational thought or feeling but rather by weighing the pros and cons of multiple dimensions – a behavior which is quite possibly as close to homo economicus as it gets. And this bot will operate in a world that is, at least for now, optimized for the irrational, emotional behavior of humans. One where package design might matter more than the nutritional content of your breakfast cereal, one where we buy things because we can’t control the impulse and crave the dopamine hit, and one where whole industries were built to exploit our behavioral economics.
By prioritizing rationality and suitability over marketing flair, AI bots could dramatically change the way products are sold and bought. Are you ready? @Pascal
The Thin Wisps of Tomorrow
Exploring Our Future: Insights from 300 Experts on the 2034 Global Landscape 🌍
The Atlantic Council has released their new report titled “Welcome to 2034: What the World Could Look Like in Ten Years, According to Nearly 300 Experts.” It provides a thought-provoking glimpse into our potential future. Here are some key takeaways:
Shifting Power Dynamics: The prediction of competing global power centers suggests a significant shift in international relations.
Russia’s Uncertain Path: Post-Putin, Russia might face instability, marking a crucial phase in its political journey.
Nuclear Developments: Iran’s nuclear armament is foreseen, signaling a more turbulent nuclear age.
Challenges for the UN: The United Nations might struggle to effectively convene nations for pressing global issues, especially climate change.
A Pessimistic Outlook?: Interestingly, 60% of the experts surveyed hold a somewhat gloomy view of the future.
A Ray of Hope in Climate Action: Despite the overall outlook, there’s an anticipated increase in global cooperation to combat climate change.
AI might just be (for now) too expensive to truly disrupt the labour market 🏭
A recent study conducted by MIT CSAIL examines the economic practicality of AI replacing human labor, particularly in tasks involving vision. The findings reveal that only about 23% of these jobs are economically viable for AI automation. This challenges the widespread belief in rapid AI-driven job displacement and suggests a more gradual integration of AI into various sectors. The study’s unique approach considers not only the technical aspects but also the economic implications of deploying AI systems. The research offers a fresh perspective on AI’s impact on the labor market, suggesting that the risk of automation may be lower than previously estimated. It calls for a more systematic evaluation of the feasibility of adopting new technologies in industries.
What We Are Reading
🐢 Why Strategic Slowness Is the Next Big Trend for 2024, According to a Stanford Management Professor After all the turmoil of Covid, post-pandemic inflation, and return-to-office battles, office workers are exhausted. So what are the predictions for the next big thing in 2024? “Strategic slowness” could be a thing. Heck, say yes! @Jane
🕵️♀️ How a 27-Year-Old Codebreaker Busted the Myth of Bitcoin’s Anonymity A fascinating read on how Sarah Meiklejohn discovered that Bitcoin transactions were not as anonymous as many believed, using meticulous experimentation and analytical techniques to trace and identify users. @Mafe
🖱️ We’ve Forgotten How to Use Computers The rise and fall of the mouse is the story of how computing became first intuitive, then essential, and eventually ubiquitous and perhaps overwhelming. @Jeffrey
💡 Artificial Intelligence Can Make Companies Greener, but It Also Guzzles Energy As researchers pursue accurate insights into the resource consumption of AI models, factors such as a data center’s location impact its water consumption quite drastically. @Julian
🐕 Why Your Dog Helps You Relax More than Your Friends Do Dogs are incredible, and more than just a valuable companion. Having them around while you work has huge benefits, as bodies tend to be less physiologically reactive when their pets are present. @Pedro
🧬 The Man Who Coined the Word “Robot” Defends Himself Did you know that the inventor of the term “robot” intended them to be organic matter created through chemistry rather than mechanics? @Pascal
Bits & Pixels
» An 11-year-old Aissam Dam from Morocco was successfully treated for congenital deafness using a novel gene therapy-based approach.
» Randstad’s 2024 Workmonitor report provides an interesting insight into workplace priorities for this year. Unsurprisingly, topics such as equity and inclusion continue to rank high, with future-proofing skills, especially in AI, becoming increasingly important.
» AI is increasingly being used to judge gymnastics competitions in order to obtain more precise and less biased scores.
» Using AI coding tools, such as the popular GitHub Copilot, can create a downward pressure on code quality.
» Paris Hilton is bringing her family’s namesake hotel business into the popular online world, Roblox. Meanwhile, Microsoft takes another stab at bringing meetings into VR through their Mesh platform.
» German 3D printing company, Zellerfeld, turns anyone into a sneaker designer and partners with fashion powerhouses Louis Vuitton and Moncler in the process.
Some Fun Stuff
An Ode to the Internet: Do you remember the screeching sound of dial-up modems? In 1996, an orchestra played the V.90 56k dial-up modem handshake in a classical composition. It doesn’t even sound that bad. Maybe our modems should have used the violin?
Quote of the Week
“Then you better start swimmin’ or you’ll sink like a stone / For the times, they are a-changin’”
— Bob Dylan