Will AI Actually Boost Productivity and Consumer Demand? Maybe Not

A recent report by PwC suggests artificial intelligence will generate $15.7 trillion in economic impact to 2030. Most of us, reading, seeing or hearing that estimate, will reflexively assume that means an incremental boost in global economic growth of that amount. 

Actually, even PwC says it cannot be sure of the net AI impact, taking into account all other growth-affecting events and trends. AI could be a positive, but then counteracted by other negative trends. 

Roughly 55 percent of the gains are estimated from “productivity” advances, including automation of routine tasks, augmenting employees’ capabilities and freeing them up to focus on more stimulating and higher value adding work, says PwC. 

As much as we might believe those are among the benefits, most of us would also agree we would find them hard to quantify too closely. 

About 68 percent will come from a boost in consumer demand: “higher quality and more

personalized products and service” as well as “better use of their time,” PwC says. Again, that seems logical enough, if likewise hard to quantify. 

source: PwC 

Just as important, be aware of the caveats PwC also offers. “Our results show the economic impact of AI only: our results may not show up directly into future economic growth figures,” the report states.

In other words, lots of other forces will be at work. Shifts in global trade policy, financial booms and busts, major commodity price changes and geopolitical shocks are some cited examples. 

The other issue is the degree to which AI replaces waning growth impact from older, maturing technologies and growth drivers, and how much it could be additive.

“It’s very difficult to separate out how far AI will just help economies to achieve long-term average growth rates (implying the contribution from existing technologies phase out over time) or simply be additional to historical average growth rates (given that these will have factored in major technological advances of earlier periods),” PwC consultants say. 

In other words, AI might not have a lot of net additional positive impact if it also has to be counterbalanced by declining impact from legacy technologies and other growth drivers. 

Thank PwC consultants for reminding us how important assumptions are when making forecasts about artificial intelligence or anything else.