S2E40: Avi Goldfarb, Economist, University of Toronto
Nov 21, 2023
auto_awesome
Avi Goldfarb, an economist specializing in the economics of the internet, discusses topics such as the history of AI in Toronto, creating lasting memories through vacations, the influence of family on interest in social science, challenges of obtaining data, luck and collaboration in research, methods in econometrics, analyzing the impact of ambulance chaser laws on online advertising, interdisciplinary research, the commercial potential of AI, and the downward sloping demand curve.
AI's value lies in making accurate predictions and can reshape industries and decision-making processes.
AI as prediction technology complements human judgment and does not replace it.
Chat GPT has sparked widespread curiosity and exploration of AI technology in various industries.
Deep dives
The origins of the book
The book 'Prediction Machines' was written by Ajay Agrawal, Joshua Gans, and Avi Goldfarb. Its origins trace back to a paper they co-authored in 2008, which was instrumental in getting them tenure. In 2012, Goldfarb and Gans became exposed to the potential of artificial intelligence (AI) through a company that emerged from the computer science department at the University of Toronto. This led to their deeper interest in AI and its commercial applications.
The rise of AI in the creative destruction lab
In 2012, the creative destruction lab at the University of Toronto began witnessing a surge in applications from AI-based startups. They observed the significant demand for AI-focused entrepreneurship and decided to expand the lab to accommodate 25 AI-based companies. This expansion marked a turning point in their interaction with the AI community.
The impact of AI on marketing and economics
The authors recognized the growing importance of AI and its potential impact on various fields, including marketing and economics. As economists working in a marketing department, they saw an opportunity to bridge the gap between the two disciplines and explore the implications of AI on prediction and decision-making. This led them to write the book 'Prediction Machines', which delves into the transformative power of AI and its ability to make accurate predictions.
The book's focus on AI prediction
The book 'Prediction Machines' focuses on the idea that AI's greatest value lies in its ability to make predictions. The authors argue that AI can serve as a powerful tool for decision-making by providing accurate forecasts based on large amounts of data. The book explores the implications of this idea, including its potential to reshape industries, address uncertainty, and redefine the role of humans in decision-making processes.
AI as Prediction Technology
The podcast episode discusses AI as prediction technology and highlights its value in understanding the state of the world. The hosts explain that AI improves the accuracy of predictions, allowing us to know the likelihood of certain outcomes or events. However, AI alone cannot provide judgment or decision-making abilities. They provide an example of AI being used in HR to assist in the hiring process. While AI can predict which candidates have the highest likelihood of being a good fit, the judgment about what defines a 'good employee' and the consideration of the associated payoffs still require human involvement. This perspective on AI as prediction technology and its complementarity with human judgment is a key insight discussed in the podcast.
The Impact of Chat GPT in Creating Demand for AI
The episode also explores the impact of Chat GPT (Generative AI) in creating widespread interest and demand for AI technology. The hosts note that prior to Chat GPT, AI seemed relatively abstract and inaccessible to many people. However, the user-friendly interface and the ability to interact with AI in novel ways has captured the attention of various industries and professionals. Sectors such as healthcare, construction, advertising, marketing, finance, and beyond have shown increased interest in understanding AI and its potential applications. The hosts further emphasize that much of the discourse around AI is still theoretical, as the field of AI is relatively new, and concrete empirical evidence is yet to emerge. However, the popularity of Chat GPT has sparked widespread curiosity and exploration of AI technology among different fields and industries.
Welcome to this week’s episode of the Mixtape with Scott! This week we have an outstanding guest named Avi Goldfarb of the University of Toronto. Avi is a PhD economist who graduated from Northwestern in the early 2000s specializing in the economics of the internet. He is now at the University of Toronto where he is a professor in the marketing department as well as chief data scientist with a very interesting lab called the Creative Destruction lab that among other things specializes in the economics of artificial intelligence. He is the author of two very popular and probably both best selling books aimed at a general audience on the economics of artificial intelligence: Power and Prediction and Prediction Machines (both with Joshua Gans and Ajay Agrawal). Given the popularity of AI, as well as the recent turn of events with AI giant, OpenAI, I think there couldn’t be a better time to to have him on the show. I loved this interview and accidentally went over, but Avi graciously hung in there with me. I hope you love it too. Don’t forget to like, share and comment! Happy Thanksgiving to all!
Scott's Substack is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
