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AI adoption and Solow's productivity paradox

fortune.com

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Re: AI adoption and Solow's productivity paradox

#21

Post by crazygringo »

Just to be clear, the article is NOT criticizing this. To the contrary, it's presenting it as expected, thanks to Solow's productivity paradox [1].

Which is that information technology similarly (and seemingly shockingly) didn't produce any net economic gains in the 1970's or 1980's despite all the computerization. It wasn't until the mid-to-late 1990's that information technology finally started to show clear benefit to the economy overall.

The reason is that investing in IT was very expensive, there were lots of wasted efforts, and it took a long time for the benefits to outweigh the costs across the entire economy.

And so we should expect AI to look the same -- it's helping lots of people, but it's also costing an extraordinary amount of money, and the few people it's helping is currently at least outweighed by the people wasting time with it and its expense. But, we should recognize that it's very early days, and that productivity will rise with time, and costs will come down, as we learn to integrate it with best practices.

[1] https://en.wikipedia.org/wiki/Productivity_paradox

Re: AI adoption and Solow's productivity paradox

#22

Post by lich_king »

sebmellen wrote: post #12

The thing with a lot of white collar work is that the thinking/talking is often the majority of the work… unlike coding, where thinking is (or, used to be, pre-agent) a smaller percentage of the time consumed. Writing the software, which is essentially working through how to implement the thought, used to take a much larger percentage of the overall time consumed from thought to completion. Other white collar busines…

> making slides/decks to communicate those thoughts,

That use case is definitely delegated to LLMs by many people. That said, I don't think it translates into linear productivity gains. Most white collar work isn't so fast-paced that if you save an hour making slides, you're going to reap some big productivity benefit. What are you going to do, make five more decks about the same thing? Respond to every email twice? Or just pat yourself on the back and browse Reddit for a while?

It doesn't help that these LLM-generated slides probably contain inaccuracies or other weirdness that someone else will need to fix down the line, so your gains are another person's loss.

Re: AI adoption and Solow's productivity paradox

#24

Post by Banditoz »

jeron wrote: post #5
DaedalusII wrote: post #3

If you include microsoft copilot trials in fortune 500s, absolutely. A lot of major listed companies are still oblivious to the functionality of AI, their senior management don't even use it out of laziness

it turns out it's really hard to get a man to fish with a pole when you don't teach them how to use the reel

If AGI is coming, won't there just be autofishers and no one will ever have to fish again, completely devaluing one's fishing knowledge and the effort put in to learn it?

Re: AI adoption and Solow's productivity paradox

#25

Post by sheeshkebab »

DaedalusII wrote: post #10
chaos_emergent wrote: post #6

Earlier quoted context omitted.

100% All of the people who are floored by AI capabilities right now are software engineers, and everyone who's extremely skeptical basically has any other office job. On investigating their primary AI interaction surface, it's Microsoft Co-Pilot, which has to be the absolute shittiest implementation of any AI system so far. As a progress-driven person, it's just super disappointing to see how few people are benefitin…

I think anthropic will succeed immensely here because when integrated with Microsoft365 and especially Excel it basically does what co-pilot said it would do. The moment of realisation happen for a lot of normoid business people when they see claude make a DCF spreadsheet or search emails claude is also smart because it visually shows the user as it resizes the columns, changes colours, etc. Seeing the computer do th…

No one wants a chatbot “integrated” with excel and office365 crap, it’s clippy 2.0 bullshit.

Replace excel and office stuff with ai model entirely then people will pay attention.

Re: AI adoption and Solow's productivity paradox

#26

Post by amrocha »

Herring wrote: post #9

My compsci brain suggests large orgs are a distributed system running on faulty hardware (humans) with high network latency (communication). The individual people (CPUs) are plenty fast, we just waste time in meetings, or waiting for approval, or a lot of tasks can't be parallelized, etc. Before upgrading, you need to know if you're I/O Bound vs CPU Bound.

Then where are all the amazing open source programs written by individuals by themselves? Where are all the small businesses supposedly assisted by AI?

Re: AI adoption and Solow's productivity paradox

#27

Post by dimitri-vs »

chaos_emergent wrote: post #6
DaedalusII wrote: post #3

If you include microsoft copilot trials in fortune 500s, absolutely. A lot of major listed companies are still oblivious to the functionality of AI, their senior management don't even use it out of laziness

100% All of the people who are floored by AI capabilities right now are software engineers, and everyone who's extremely skeptical basically has any other office job. On investigating their primary AI interaction surface, it's Microsoft Co-Pilot, which has to be the absolute shittiest implementation of any AI system so far. As a progress-driven person, it's just super disappointing to see how few people are benefitin…

IMO Copilot was "we need to give these people rope, but not enough for them to hang themselves". A non technical person with no patience and access to a real AI agent inside a business is a bull in a china shop. Copilot Cowork is the closest thing we have to what Copilot should have been and is only possible now because models finally got good enough to be less supervised.

FWIW Gemini inside Google apps is just as bad.

Re: AI adoption and Solow's productivity paradox

#28

Post by cmiles8 »

I like AI and use it daily, but this bubble can’t pop soon enough so we can all return to normally scheduled programming.

CEOs are now on the downside of the hype curve.

They went from “Get me some of that AI!” after first hearing about it, to “Why are we not seeing any savings? Shut this boondoggle down!” now that we’re a few years into bubble, the business math isn’t working, and they only see burning piles of cash.

Re: AI adoption and Solow's productivity paradox

#29

Post by n_u »

Original paper https://www.nber.org/system/files/working_papers/w34836/w348...

Figure A6 on page 45: Current and expected AI adoption by industry

Figure A11 on page 51: Realised and expected impacts of AI on employment by industry

Figure A12 on page 52: Realised and expected impacts of AI on productivity by industry

These seem to roughly line up with my expectations that the more customer facing or physical product your industry is, the lower the usage and impact of AI. (construction, retail)

A little bit surprising is "Accom & Food" being 4th highest for productivity impact in A12. I wonder how they are using it.

Re: AI adoption and Solow's productivity paradox

#30

Post by 8note »

Herring wrote: post #9

My compsci brain suggests large orgs are a distributed system running on faulty hardware (humans) with high network latency (communication). The individual people (CPUs) are plenty fast, we just waste time in meetings, or waiting for approval, or a lot of tasks can't be parallelized, etc. Before upgrading, you need to know if you're I/O Bound vs CPU Bound.

operationally, i think new startups have a big advantage on setting up to be agent-first, and they might not be as good as the old human first stuff, but theyll be much cheaper and nimble for model improvements
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