The field of economics is on the cusp of a transformative revolution, and it goes by the name of generative artificial intelligence, or “genAI.” Led by advancements in technologies like ChatGPT, this new wave of AI has the potential to reshape the way economists conduct research, teach, and even forecast economic trends.
GenAI: A game-changer for research
Economists have long used machine learning to analyze data and make economic projections, but genAI offers a distinct advantage. Professor Anton Korinek of the University of Virginia believes that genAI will “revolutionize research” by assisting economists in various ways:
Idea generation and feedback GenAI tools like ChatGPT can help economists brainstorm research ideas by providing lists of potential topics and evaluating research plans.
Writing and editing GenAI excels at copy editing, suggesting titles, and generating promotional content for research papers, making economists’ writing more clear and effective.
Summarization Chatbots can summarize lengthy academic papers, making it easier for economists to extract key insights and information.
Data analysis and coding GenAI, particularly ChatGPT Advanced Data Analysis, can assist in writing, explaining, translating, and debugging code, streamlining technical aspects of economic research.
Mathematical derivations While genAI can help with mathematical derivations, it still has some limitations in this regard.
GenAI in education
GenAI is not limited to research; it also has a role in education. Professors Tyler Cowen and Alex Tabarrok at George Mason University have shown how genAI can enhance teaching economics:
GenAI tools can summarize text, improve writing, suggest ideas, and solve simple economic models with explanations, making them valuable resources for educators.
These tools can even create credible syllabi for various courses, enhancing the teaching experience.
GenAI and economic forecasting
Recent research indicates that genAI is a potent tool for economic forecasting:
Policy advisers at the St. Louis Fed compared inflation forecasts generated by Google’s PaLM (similar to ChatGPT) to those of the Survey of Professional Forecasters and found that PaLM’s predictions were more accurate, suggesting that large-language models could provide a cost-effective alternative for inflation forecasting.
Impact on employment
While genAI promises to enhance productivity and efficiency in economics, its impact on employment remains a topic of discussion:
A study by job site Indeed suggests that software development jobs, such as software engineers, face the highest exposure to genAI-related disruption.
Svenja Gudell, Indeed’s chief economist, notes that genAI could lead to job losses or increased output, depending on how companies choose to implement the technology.
Despite the rise of genAI, economists’ work will always require a “human touch,” especially in interpreting model results and providing context.
GenAI is poised to revolutionize the field of economics, offering economists powerful tools for research, teaching, and forecasting. While it may impact certain job sectors, economists will continue to play a vital role in providing the human insight and context needed to navigate the complexities of economic analysis. As the field evolves, the collaboration between economists and genAI promises to drive innovation and enhance our understanding of economic phenomena.