Nobel economist Robert Shiller warns AI job loss fears could trigger their own economic crisis

Nobel laureate economist warns AI jobs apocalypse fears could become a self-fulfilling prophesy | Fortune

The disparity between the trillions spent fueling AI and the distaste of the people meant to adopt it has grown into a chasm. Only 16% of Americans believe AI will have a positive impact on society over the next 20 years, according to a recent survey conducted by Pew, while 40% expect the opposite. There's a number of reasons people detest AI -- the data centers are disruptive, it gobbles up water -- but by far the most salient one is that it could take jobs. Robert Shiller, a Nobel economist, worries that that panic could become a self-fulfilling prophecy. In a guest essay in The New York Times on June 22 headlined "This Doommaxxing Has Got to Stop," the Yale economist expanded on his Nobel-prize winning work on how markets misprice risk. He's now interested in the cause of that mispricing, and the cause, he argued, is about narrative, the stories people tell each other about where the economy is headed. "When millions of people make millions and millions of decisions based upon negative expectations, there is a risk that fear can actually help birth the reality," he warned. The fear that the machines are coming for workers is an old one. But in each instance, fear ran ahead of the actual displacement, according to Shiller. Luddites revolted against the loom in the 1830s, while newspapers perpetuated the drama. The 1920s got a hit play R.U.R., in which the robots rise against the people who built them. Similarly, the 1929 stock market crash couldn't have caused the Great Depression as only about 2% of American households owned stock at the time. What deepened the economic ruin was a collapse in consumer spending, driven by sudden, widespread uncertainty about future income. And a 1957-58 downturn was branded the "Automation Recession" by journalists who pinned it on factory machines; it was later re-described as an ordinary cyclical dip. Shiller worries the same misattribution is underway now. The job market has slowed for a host of reasons, he wrote, but there are reports that fear of an AI apocalypse is "worsening the freeze and contributing to record lows in consumer sentiment." Seventy percent of Americans told Quinnipiac in March they expect AI to leave fewer jobs for people, up from 56% a year earlier, yet the Yale Budget Lab has found no significant change in the occupational mix among the jobs most exposed to AI since ChatGPT launched in late 2022. This round is even worse, he said, because the source of the fear is coming from the leaders of the AI buildout themselves. Anthropic's Dario Amodei has said AI could erase half of entry-level white-collar jobs within five years; Microsoft AI chief Mustafa Suleyman has put most white-collar automation inside 12 to 18 months. Both have since walked the timelines back. Shiller's one note of hope is leadership; he cites a recent paper finding that President Franklin Roosevelt's 1935 fireside chat measurably raised spending in cities with more radio exposure. "There's only so much Washington can do about these narratives. And, suffice to say, Donald Trump is no Franklin Roosevelt," Shiller concluded. "As such, perhaps the best we can do is to appeal directly to the leaders of Silicon Valley who have been promoting these negative narratives with such vigor. Surely the resulting media attention highlighting how dangerously powerful your A.I. model is may help you sell more wares, but it may be far harder to do so in a period of recession."

Nobel Economist Robert Shiller Warns AI Job Loss Fears Could Become A Self-Fulfilling Prophecy - NVIDIA (

Nobel Prize-winning economist Robert Shiller cautioned that widespread fear of artificial intelligence eliminating jobs could worsen economic damage on top of any real job losses AI creates. Writing in The New York Times story on Monday, Shiller argued that narrative-driven anxiety amplifies the threat beyond what technology alone would cause. He cited a March Quinnipiac poll finding 70% of Americans believe AI will reduce jobs, while a Pew Research survey showed only 16% expect AI to benefit society over the next two decades. "When millions of people make millions and millions of decisions based upon negative expectations, there is a risk that fear can actually help birth the reality," Shiller wrote. Tech Leaders Fanning the Flames Shiller singled out Anthropic CEO Dario Amodei in his article, who told Axios last May that AI could eliminate half of all entry-level white-collar jobs and drive unemployment to 20% within five years, up from the current rate of 4.3%. In early June, Sen. Bernie Sanders (I-Vt.) amplified the alarm further, warning on X that AI and robotics could wipe out millions of jobs while Congress does "nothing" to protect displaced workers. Fear May Be The Real Recession Trigger The "Narrative Economics" author argued that tech leaders promoting worst-case scenarios risk tipping consumer sentiment into a contraction that hurts their own bottom line. "Surely, the resulting media attention highlighting how dangerously powerful your AI model is may help you sell more wares, but it may be far harder to do so in a period of recession," he wrote. Photo Courtesy: Ken stocker on Shutterstock.com Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.