

What Markets Tell Us About AI Timelines (with Basil Halperin)
Sep 1, 2025
Basil Halperin, an assistant professor of economics at the University of Virginia, dives into the intriguing world of economic indicators and their implications for AI timelines. He discusses how rising interest rates may signal market expectations of transformative AI and the complexities between strong AI benchmarks and real economic impact. The conversation also touches on market efficiency, the role of financial institutions in shaping perceptions of AI, and the potential wealth concentration effects due to advancements in AI technology.
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Interest Rates Signal AI Expectations
- If markets expected transformative AI soon, long-term real interest rates would rise due to changes in saving behavior.
- Today's real rates are not especially high, which limits probability mass on near transformative AI.
Markets As Forward-Looking Aggregators
- Financial markets broadly aggregate available information and reflect forward-looking expectations.
- No-arbitrage incentives and many informed traders make prices useful signals about the future.
Limits To Arbitrage On Long Horizons
- Markets incorporate long-horizon expectations but are weaker for events far in the future due to limits to arbitrage.
- Mispricings that pay off far away persist because holding counter-trades is costly and risky.