Queen’s Global MarketsA PREMIER UNDERGRADUATE THINK-TANK

The Future of Artificial Intelligence

Ethan Vera, Katie Russell, Endi Xherro, Kyle Bernat-Riddle, Nabil Rafat

09.21.2017

An Analysis of Its Economic and Social Impact

2

AgendaWhat We Will be Discussing Today

1 What is Artificial Intelligence?

2 Current and Future Applications

3 Economic Impact

4 Security Considerations

5 Government Involvement

3

“Artificial Intelligence (AI) refers to a set of computer science techniques that enable

systems to perform tasks normally requiring human intelligence, such as visual

interpretation, speech recognition, decision making and language translation.”

- The Economist Intelligence Unit

Subsectors of Artificial Intelligence

• Machine Learning and Deep Learning are

branches of AI based on algorithms and complex

data analysis, which enables computers to learn

and adapt differently

• The repetitive analysis of large data sets allows

computers to recognise patterns which are then

extrapolated to perform a wide range of activities

• Today’s use of AI is “narrow” – it is used to

perform one specific task, such as speech and

facial recognition

What is Artificial Intelligence?

Artificial Intelligence Taxonomy

Sources: Bloomberg, Garter, Harvard Business Review, MIT Tech. Review, Softbank, The Economist Intelligence Unit

4

Areas of Disruption

• Today’s use of AI is narrow – it is used to

perform one specific task, such as speech and

facial recognition

• AI is also used for mass data analysis on

consumer behaviour, the most famous being

Facebook and Netflix’s algorithm that

recommends content to its users

Projects Under Development

Current and Future ApplicationsThe 21st Century’s Most Revolutionary Technology is Poised to Change the World

Sources: BBC, The Economist, United Nations

Current Applications

Sources: Bloomberg, MIT, Softbank, The Economist

• Autonomous Logistics (Automobiles, Trucking,

Pilot-less Aircraft)

• Medical Treatment Recommendations &

Treatment Design Plans

• Autonomous Investment Recommendations &

Robotic Process Automation

• Natural Language Processing

• Security Monitoring & Analysis

• Journalism

5

The Risks The Reward

Subtopic

• Economists are becoming increasingly

concerned about job polarization

• The stagnation of growth in median wages has

been viewed as being potentially connected to

increasing application of AI

• Many economic pundits have seen AI as a means

of reducing entry-level jobs

Correlation of Wages & Potential Automation

Economic ImpactShort-Term Pain Leads to Long-Term Gain

Sources: BBC, The Economist, United Nations

• Xyz

- Xyz

• AI has pioneered dramatic increases in high paying

computing jobs

• Replaces tasks and positions that humans are

inefficient or not technically apt at completing

• Significant evidence that AI will improve the quality

of life and enhance life expectancy

• Dramatic decreases in information asymmetry

Sources: The Economist, MIT, McKinsey & Co.

Transition in Type of Work Within the US

6

Historical Context Growth in High-Tech Employment

• Historically, automation has created more jobs

than it has destroyed

• Automating a task increases the demand for

complimentary ones

• It is easier to identify the jobs that will be

automated, however more difficult to determine

where new jobs will be created

US Unemployment Rate (January, 1948 to August, 2017)

• Xyz

- Xyz

Dotcom Boom

IBM PC LaunchGM Assembly Robotics Intro

0 2 4 6 8 10 12 14

Delware

South Carolina

Michigan

Kansas

Washington

Texas

Ohio

North Carolina

Alabama

US Average

Economic ImpactTech Advancement Does Not Mean Unemployment

Sources: The Economist, MIT, U.S. Federal Reserve FRED System

7

83

31

4

0

20

40

60

80

100

Less than 20 Dollars 20 to 40 Dollars More than 40 Dollars

44

19

8 61 0

0

10

20

30

40

50

Less than

High School

High School

Degree or

Equivalent

Trade

School

Certificate

Associates

Degree

Bachelors

Degree

Graduate

Degree

Economic ImpactLabour Market Disruption

The Occupation Impact Low-Skill Labour Market Disruption

• When focusing on whole occupations rather than

specific single-job tasks, it was found that 47% of

jobs in the United States were at a high risk of

being replaced by AI empowered automation

• However, other studies have shown that only 9%

of jobs in the US are fully automatable

• There is consensus between both estimation

methods that low-paid and low-skill work is

threatened the most

Source: Frey & Osborne, Arntz, Gregory & Zierahn, Executive Office of the President

0 0.2 0.4 0.6 0.8 1

Recreational TherapistDoctors

Athletic TrainersChemical Engineers

FirefightersHealth Technologists

EconomistsCommercial Pilots

MachinistsTypists

Real Estate AgentsTechnical Writers

Retail SalespeopleAccountants & Auditors

Telemarketers

Jobs with Highly Automatable Skills (%)xProbability of Automation to Median Wage

8

395

23562

61

36

367

China India

Europe Big 5 United States

Japan Remaining Countries

Top 1% Income Share in the U.S. Creative Destruction

Subtopic

Wealth Concentration and Inequality Labour with Automatable Activities

Economic ImpactInequality of Productivity Distribution

Sources: BBC, The Economist, United Nations

• The productivity gains from AI will directly

benefit those who own the means of automation,

i.e. corporate shareholders

• Meanwhile, workers that are replaced suffer

depressed wages, leading to further income

inequality

• If the disruption occurs rapidly enough,

consumption will fall and economic stagnation or

decline could follow

0%

5%

10%

15%

20%

25%

30%

1910 1930 1950 1970 1990 2010

• AI will cause a wide variety of jobs, primarily

low-skill/paid, to be destroyed, and

simultaneously create new jobs to support the

technological change

• The new jobs will almost exclusively be high-skill

jobs, and the number of new jobs created will be

far less than those destroyed

Sources: Piketty and Saez, Martin Ford, Bruegel, McKinsey Global Institute, Executive Office of the President

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The Vision The Case for AI

• A utopian future with Genetics, Nanotechnology

and Robotics (GNR) revolutionizing everything

- Changing our genes to avoid disease; aiding in

drug discovery; robots making tasks easier and

less repetitive

Dealing with the Dangers

Security ConsiderationsThe Zuckerberg Perspective

• The dangers are well understood

- Time to debate the issues and take wise actions

to deal with them effectively

• Increased unemployment and greater wealth

inequality are debatable given that the Industrial

and Digital Revolutions decreased rather than

increased unemployment

• Possible catastrophes, - those that threaten to

destroy the environment or end human

civilization - are meant to simply attract attention

“The truth is no online database will replace your

daily newspaper, no CD-ROM can take the place

of a competent teacher and no computer network

will change the way government works”

– Clifford Stoll

Sources: MIT, The Economist, University of Nicosia Study

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Security ConsiderationsSafety Concerns of Artificial Intelligence

Sources: BBC, The Economist, United Nations

Dangers of AI Importance of Proactive Regulation

• In a recent Oxford survey of 350 AI experts, the

probability of an ‘extremely bad’ outcome, such

as human extinction as a result of AI, was

estimated at 5%

• Musk: “reason we needed to colonize Mars —so

that we’ll have a bolt-hole if AI goes rogue and

turns on humanity”

• Hawkings: "The development of full AI could

spell the end of the human race"

Artificial Intelligence Development Timeline

• Digital currencies, drones, autonomous vehicles,

peer-to-peer lending and renewables are just some

areas of tech that have largely ignored regulatory

guidelines

• Musk envisions a government agency forming

first and seeking to gain insight into AI and its use

before regulating

2070:

Judgement

Day

2053:

Working

as

surgeons

2057:

Beat

humans at

every task

2049:

Writing a

bestseller

2031:

Working

in retail

2027:

Driving

trucks

2026:

Writing

high-

school

essays

2024:

Better than

humans at

translating

languages

2017:

AlphaGo beats

the world’s best

human player

1997:

IBM's Deep

Blue beats the

chess

grandmaster

2011:

Beats

champions in

Jeopardy

Source: Oxford & Yale Study, Gartner, TechCrunch

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56%

46%44%

37%32%

Transportation

and Storage

Manufacturing Wholesale and

Retail Trade

Administrative

and Support

Services

Financial and

Insurance

• AI will inevitably change citizens’ lives, affecting their privacy, labour and security

• Key issues that will require government attention:

- Who is at fault in the event AI causes societal harm

- Job automation and the further concentration of wealth

- How to regulate AI technology while promoting domestic innovation

Job Automation (% at Potential High Risk) Issues with Regulating Artificial Intelligence

Government InvolvementBounding the Unknown

Reasons for Government Involvement

Sources: Brookings Institute, Harvard Business Review, PwC

• Regulators lack an understanding of AI

- A proposed solution is creating a Federal

Robotics Commission comprised of industry

experts who would recommend policy to

federal agencies (e.g. SEC, FDA)

• AI cannot be specifically defined and the impact

on both firms and consumers is largely unknown

• The robots being developed are seemingly

independent, thus their legal status is ambiguous

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5Denmark

1Singapore

4Finland

2Sweden

Subtopic

Government InvolvementRegulation v. Innovation

Sources: BBC, The Economist, United Nations

Proactive Regulation

• Governments would regulate AI’s development

and implementation in advance of its use by firms

and consumers

• The intention is to prevent societal harm before it

occurs

• Possibility of discouraging innovation, putting the

domestic economy at a great disadvantage

• Regulations would be created after incidence of

societal harm

• This is the most common regulatory process

• There are concerns AI could cause such extreme

societal harm that subsequent regulation would be

ineffective in aiding vulnerable and previously

affected citizens

World Digital Competiveness Top Five Ranking Countries

Sources: Brookings Institute, IMD World Competitiveness Center

Reactive Regulation

3USA