5 stories that caught my eye this week and what I took from them.
The Economic Impact of Generative AI – Andrew McAfee
- Generally Faster: The Economic Impact of Generative AI [Andy McAfee Report - 04252024] (storage.googleapis.com)
- The debate about the economic impact of AI is ongoing. Here is another interesting entry from Andrew McAfee at MIT.
- He’s always been a Techno-optimist who credits technology with having reduced working hours, increased standards of living, extended lifespans, reduced the global disease burden and driven positive trends in environmental indicators.
- The most interesting sections are on how AI could change the corporate competitive landscape…winners and losers.
- Historically, general-purpose technologies have disrupted industries and reshuffled industry leaders not because incumbents were unaware of the technology, but because they couldn't foresee its transformative potential or were reluctant to overhaul successful business models
- Markets are pricing Big Tech to be the greatest AI winners. But McAfee argues that because of its low cost and ease of adoption, generative AI will help level the playing field between large and small firms, which have fallen behind in both innovation and productivity in recent years.
- Bottom line: The AI barbell of long Big Tech and small caps?
Battery recycling shatters the myth of electric-vehicle waste – Tom Randall, Bloomberg
- Battery recycling shatters the myth of electric-vehicle waste | The Progress Playbook
- Making a battery for an electric vehicle typically requires mining hundreds of pounds of hard-to-extract minerals. That’s why an EV needs to drive 25,500 miles in the US (less in Europe) to break even with an ICE car in terms of emissions.
- But that assumes zero recycling, which is about to ramp up. There are a lot of valuable materials in batteries.
- Why only now? There have simply not been enough end-of-life EVs. My first-generation Nissan Leaf is over 10 years old and still going strong.
- A study by Stanford University on Redwood Materials’ recycling process shows it uses 79% less energy and produces 55% fewer CO2 emissions than traditional refining. Localized recycling further enhances these benefits, achieving up to 80% total CO2 savings.
- With the U.S. grid expected to draw two-thirds of its energy from carbon-free sources by 2030, an EV made with recycled materials could reach emission parity with ICE vehicles in just a few months.
- Bottom line: EVs make sense today, but their advantage is only growing…in terms of cost to consumers and cost to the environment.
AI companies are making millions producing election content in India – Rest of World
- Indian politicians spend big on AI election content - Rest of World
- The existential threats of AI are some way off in the future (hopefully), but the impact on misinformation looms in 2024.
- The Indian election is perhaps the best guide to what might lie ahead for the US election.
- Indian parties are spending big on AI-generated election campaign material. ‘Some are willing to invest up to 20% of their total campaign budget on communication tools like WhatsApp and an AI-enabled interactive voice response system.’
- In India, higher campaign budgets correlated with increased AI use…which does not bode well for a US election campaign flush with cash.
- AI applications in elections vary culturally, with India using personalized social media videos, 3D holograms via QR codes, and deepfake videos.
- Bottom line: Despite extensive use, it seems AI has not significantly altered the outcome of the Indian election. But it was never likely to be a close election.
What we’re reading about the age of AI, jobs, and inequality – World Bank
- What we’re reading about the age of AI, jobs, and inequality (worldbank.org)
- A fantastic resource highlighting academic papers on AI and its impact on the economy.
- There are too many for me to summarise, but it’s a great jumping off point for anyone wanting to dig deeper into the topics.
- One interesting angle is AI's potential influence on the Emerging Markets (EM) vs. Developed Markets (DM) divide. EM equities have lagged behind DM for over a decade, making it a tempting investment proposition for both short- and long-term investors.
- The papers cited here have no definitive answer on AI's role in the EM-DM divide. While advanced nations might face greater AI risks due to cognitive job prevalence, they also stand to gain more from AI advantages.
- To me, the base line is that AI is a relative negative for EM. Historically, the EM development path has been driven by manufacturing. The rise of AI-driven automation could undermine this growth model.
- Also, Goldman Sachs predicts AI will boost U.S. GDP growth by 0.4 percentage points over the next decade, compared to just 0.2 in emerging markets.
- Bottom line: Lots of material for your AI/economics deep dive
The relationship between team diversity and team performance – Wallrich et al
Workplace diversity discussions can be contentious, particularly in the US.
Beyond the cultural and political debate, what does the data say?
This new meta-analysis of 615 studies shows that diverse teams perform better, but the overall benefit is small.
But context matters! The authors find that diversity benefits were greatest in specific settings: for creative tasks and innovation.
Also, the diversity-performance link was enhanced by a team culture that distributes power and values individuality.
Bottom line: Ignore politics, follow the data on DEI