The
Economic Impact of Artificial Intelligence
Ramin Toloui
Professor of the Practice
Stanford University
Economic Policy Seminar
(Econ 101)
Department of Economics
Fall Quarter 2020
Mon & Wed 1:00-2:50pm
Course Description
The
objectives of this class are to provide students with:
(1)
frameworks for analyzing the prospective impact of artificial
intelligence/machine learning on employment, wages, inequality, industrial
organization, international competition, and governance;
(2) historical and empirical perspective on the impact of technological
revolutions and automation on living standards, economic activity, income
distribution, and social institutions; and
(3) a structured opportunity to learn and practice a range of oral and written
communication skills that are critical to future success in diverse fields.
Requirements
Course
objectives will be accomplished by examining the history of mechanization and
automation; trends in labor market and industrial concentration in recent
decades alongside IT adoption; and methods economists are using to analyze the
impact of AI. We will explore these topics through lectures,
discussion sessions, and wide-ranging readings. Key requirements
include:
Active
participation in all class discussions (20 points). Contributing
meaningfully to these discussions requires thoughtful reflection on advance
readings for each class. Participation is a key determinant of the overall
course grade.
Leadership
of a class discussion session (12 points). Successful moderation
entails effectively framing key themes to be unpacked and eliciting
participation from peers.
Brief
written summary of discussion sessions for three weekly readings (7
points). Reporting
on meetings is a vital task in business, academia, and government – doing so
effectively requires an ability to extract key points, summarize disagreements,
and be succinct. (450-500 words)
Final
Paper (51 points). Students will identify a question of interest, specify an approach
to answering that question, and produce a comprehensive final product. Various
milestones during the quarter provide opportunities to incorporate guidance
from the instructor and TA: initial proposal (750‐1000 words, 7 points*), partial draft (1250‐1750 words, 7 points*),
full draft (2500‐3500
words, 7 points*), and final submission + response to comments (2500‐3500 words excluding
response to comments, 30 points). For the first three submissions (marked with
*), full points will be awarded as long as the assignments are submitted on
time and meet specified guidelines.
Final
Presentation (10 points). Students will present the key findings of their final paper to
their peers in a presentation of approximately 10 minutes during the last week
of the course.
Course Gameplan
Week
1: What Do Economists Need to Know About Artificial Intelligence?
Define artificial
intelligence and machine learning; explain how machine learning helps solve Polayni’s paradox and enables automation of new categories
of tasks previously beyond the capabilities of machines; highlight dangers of
algorithmic bias; demystify how neural networks work.
Discussion
Readings
Supplementary
and Technical Readings
Week
2: A Brief History of Technological Revolutions and Living Standards
Provide
an overview of the history of economic development from the agricultural
revolution to the Industrial Revolution; explain how mechanization facilitated
an escape from the Malthusian trap; describe worker displacement and unequal
distribution of benefits (Engel’s pause) as new technologies were adopted;
describe how diffusion of innovation led to new products and services that
generated employment and rising living standards, epitomized by post-WWII
United States.
Discussion
Readings
Supplementary
and Technical Readings
Week
3: Does Technology Explain Rising Inequality Since the 1970s?
Describe
the rising inequality and wage polarization that has characterized labor market
patterns in the United States since the 1970s; review the key explanations for
these outcomes, including (i) skill-biased
technological change (SBTC) & the race between technology and education
(ii) job polarization from information technology adoption; (iii) demographics;
(iv) international trade and globalization; and (v) decline of labor unions.
Discussion
Readings
***Paper
Proposal Due - Friday, October 2 @ 11:59pm***
Supplementary
and Technical Readings
Week
4: How Has Technology Affected Productivity, Market Structure and
Industrial Concentration?
Provide
an overview of the changes in industrial concentration since the 1980s; review
empirical work on the rise of superstar firms and implications for compensation
of labor and capital; describe network effects and the economics of
“winner-take-all” markets; evaluate the hypotheses to explain the puzzle of low
productivity growth; analyze the potential impact of algorithms on competition.
Discussion
Readings
Supplementary
and Technical Readings
Week
5: How Can We Analyze the Prospective Impact of Artificial
Intelligence?
Examine
the channels through which artificial intelligence may affect the demand for
various types of jobs, relations between capital and labor, consumption demand
for different types of goods and services, distribution of income and wealth,
and the overall structure of economic activity.
Discussion
Readings
Supplementary
and Technical Readings
Week
6: What are the Global Economic and Geopolitical Consequences of AI?
Analyze
the potential impact of artificial intelligence on global trade patterns, paths
to economic development, relationships between citizens and governments, and
competition among nations.
Discussion
Readings
***Partial
Draft Due - Friday, October 23 @ 11:59pm***
Supplementary
and Technical Readings
· Pratt, Gill (2015). “Is a
Cambrian Explosion Coming for Robotics?” Journal of Economic Perspectives,
Summer, 29(3), pp. 51-60. (https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.29.3.51)
Week
7: Can Artificial Intelligence Help Solve Problems of Economics and
Governance?
Examine
the potential for artificial intelligence to address Baumol’s cost disease of
the service sector, improve health and education, expand opportunity, and
create a more inclusive society.
Discussion
Readings
***October
28 – Guest Speaker: JARON LANIER***
Jaron
Lanier is one of the most creative thinkers on the impact of technology on
society and decisions that will shape its future. His books include Who
Owns the Future?, You
Are Not A Gadget, Dawn of the New Everything, and Ten
Arguments for Deleting Your Social Media Accounts Right Now. We look
forward to welcoming him to class.
***Full
Draft Due - Friday, October 30 @ 11:59pm***
Supplementary
and Technical Readings
Weeks 8
and 9: Individual Meetings to Discuss Full Drafts & Final
Presentations
Week 10:
Final Presentations by Students (November 16 and 18)
***Final
Paper & Response to Comments Due - Friday, November 20 @ 11:59pm***
Course
Readings
All course
readings are designated in the Course Gameplan
section above.
Readings
must be completed before the accompanying lecture/discussion. It is
impossible to absorb the material and contribute meaningfully (see “Active
participation in all class discussions” above) without completing the readings
in advance.
All
readings are available online, either through publicly available links or via
online books that can be accessed through Stanford Libraries SearchWorks.
No Late
Work & Other Course Policies
All
courses taught in the Stanford Department of Economics are governed by a common
set of course management rules. A document explaining these rules can be found
on the Economics Department website at https://economics.stanford.edu/undergraduate/major/economics-common-syllabus. Please be sure to read
this document in its entirety, and contact me if you have any questions. Note
that it is your responsibility to familiarize yourself with these policies, and
failure to do so does not constitute grounds for exceptions from these
policies.
Late work
submitted after designated deadlines will not be accepted (it will be
marked as a zero).
Common
Deadlines
Paper
Proposal (end of Week 3) - Friday, October 2 @ 11:59pm
Partial Draft Paper (end of Week 6) - Friday, October 23 @ 11:59pm
Full Draft Paper (end of Week 7) - Friday, October 30 @ 11:59pm
Final Paper + Response to Comments (end of Week 10) - Friday, November
20 @ 11:59pm
Summary of Discussion Session - due by Friday @ 11:59pm at the end your
assigned week.
Please
see “Reference on Course Requirements” in the Files tab of Canvas for additional
details on course requirements.
Office
Hours
Ramin Toloui’s office hours will be Wednesdays 3:00-4:00pm via
Zoom. Office hours for TA Brian Higgins will be Tuesdays 9:30-10:30am via Zoom.
Final
Paper Idea Generation / Paper Proposal
A word of
warning and preparation: the process of finding a good topic for your final
paper is challenging! Getting an early start is very important, so that by Week
4 you can get down to writing rather than still refining a topic.
Start with
a broad idea that you are interested in, and voraciously read/skim all you can
find on it. Based on what you find, you may modify your topic or be led in a
new direction.
You will
likely encounter some dead ends and switchbacks. That is not wasted
effort, but rather a natural part of the process.
In terms
of generating some initial ideas, have a look through the syllabus for a broad
selection of readings on various topics. Skim those papers, and check out their
bibliographies.
Another
useful resource to explore is the hub for the National Bureau of Economic
Research (NBER)’s work on artificial intelligence (https://www.economicsofai.com). There you will find
content presented at several conferences on economics/AI, as well as
recommended papers under various topic headings.