Generative AI Adoption Outpaces Tech Revolutions, Promising Productivity Boost

A recent study by Harvard University economist David Deming and his colleagues has revealed a surprising trend: Americans have adopted generative AI at a faster rate than they did with personal computers and the internet. This rapid adoption could signal a long-awaited increase in productivity growth, potentially reviving the U.S. economy's sluggish performance in recent decades.

Unlocking the Transformative Potential of Generative AI

Unexpected Findings: Widespread Adoption Across Demographic Divides

Deming's survey, conducted in June and August 2024, uncovered remarkable insights about the adoption of generative AI among Americans. Contrary to expectations, the study found that nearly 40% of Americans aged 18 to 64 have used this technology, with a significant portion using it regularly. In fact, the August survey revealed that more than 24% of American workers had used generative AI at least once in the week prior, and nearly one in nine used it every workday.The researchers were surprised to find that the adoption of generative AI was not limited to younger or more educated individuals. They discovered that 22% of blue-collar workers reported using AI, and usage rates were above 20% in every major occupation category, except for personal services, where it was around 15%.

Outpacing Tech Revolutions: A Faster Adoption Curve

The rapid rate of generative AI adoption is particularly noteworthy when compared to the adoption of personal computers and the internet. Deming and his colleagues point out that the adoption of these previous technologies was much slower, as they required significant financial investment and technical expertise to set up and use.In contrast, generative AI is often free or has a low monthly subscription cost, and its user interface is familiar to anyone who has used Google or similar online services. This "plug and play" nature has enabled a faster and more widespread adoption, potentially signaling a transformative shift in how Americans interact with and leverage technology in their daily lives and work.

Productivity Boost: Quantifying the Economic Impact

The researchers conducted a series of calculations to estimate the potential impact of generative AI on productivity growth in the U.S. economy. By analyzing five randomized studies that examined the productivity boost from using generative AI, they arrived at a median estimate of a 25% increase in productivity.When applied to their estimate of the percentage of work hours currently assisted by generative AI, which they calculated to be between 0.5% and 3.5%, the researchers projected an increase in labor productivity of between 0.125 and 0.875 percentage points. While this may not seem like a significant jump, Deming points out that it could have a meaningful impact, considering that productivity growth over the past couple of decades has been around 1.5% per year.

Bridging the Gap: Reconciling Differing Perspectives

The researchers' findings have sparked a debate among economists, with some, like MIT's Daron Acemoglu, expressing skepticism about the true impact of generative AI on productivity. Acemoglu argues that the study does not distinguish between "fundamentally productive uses" of the technology and "occasional/frivolous uses," which may not lead to significant productivity improvements or cost reductions.Deming, however, remains optimistic, emphasizing that even a modest increase in productivity could have a substantial impact on the U.S. economy. He acknowledges that the current usage of generative AI may not lead to a "7% productivity growth," but believes that "every little bit counts" and could translate into "millions and millions of dollars of extra GDP growth and rising living standards."As the researchers continue to monitor the adoption and usage of generative AI through future surveys, the debate over its true economic impact is likely to continue. However, the initial findings suggest that this technology may be poised to play a more significant role in shaping the future of work and productivity in the United States.