Tyler Cowen on Why AI Hasn't Changed the World Yet

26:36And I get that you're not a Swifty, neither am I anymore but um people take this yeah I I liked her country once she left yeah once she left country but like where people take these uh popular culture things extremely seriously as art and don't dismiss these outputs as sort of being trash right now we're in a golden age for country and western music and also horror movies neither is really like my taste in particular, but it's easy to see what has gotten worse. And especially for critics, harder to see what has been getting better. That's my sweet spot. Country and horror is perfect for me. But just on the culture point, I mean, I think the lack of culture argument, the one I hear the most is it's a lack of shared culture, right?

27:23So you do have like some giant monoliths like a Swift or a Beyonce that everyone knows about. And, you know, they do have these large audiences. But broadly, we're not all experiencing the same media that we used to, right? Like no one is gathering around the TV to watch the finale of some show that airs like once a week and has been going on for five years. The exception is NFL football, which I don't really get it. But yeah, but it's not cultural. Sports is outside of my expertise. And the Super Bowl is cultural, right? It's a cultural event. You care about the advertisements. But the biggest of YouTube stars, which again, I would say is not personally my thing, But they can have bigger audiences than those older TV shows.

28:05Right. Well, so what I'm getting at is it does feel like nowadays there's an ability because of tech to serve up very specific content and like niche content in streams. And the analogy that I like to use is, you know, everyone knows if you download Netflix for the first time, the first movie you watch is incredibly important because whatever you watch, you know, if it's a rom-com, you're going to be served up Kate Hudson films for the rest of your life, right? The algorithm looks at what you're watching and then it serves up that additional content. What does that mean for society? The idea that you have people basically funneled into smaller and smaller streams in some respect.

28:49Well, a lot of the Netflix algorithm, it just directs you to slop. True. A lot of people have always wanted slop. Like people listen to Muzak way back when and it was quite common. or they would just listen to top 40, which in some years was very good, but often was pretty terrible, even in the 1960s. So what you can do today is basically watch not any movie out there, but you have movie, you can still buy DVDs and Blu-rays. You have access to more cinema today than you ever have. So people will sort themselves. And I think it's from the point of view of cultural consumption, I don't think there's ever been a better time to be alive than right now.

29:32Well, a lot of people abuse that and go for slop, of course. That's sad, but it's hardly new. So changing gears a little bit, Tracy and I write almost every day because we have a daily newsletter that forces us to. And I really like having that because I don't know if I would write every day if I did not have that obligation to deliver something in people's inbox that they pay for is part of the Bloomberg.com subscription. I love writing, but I don't know if I would do it every day if I didn't have this sort of requirement. I might just tweet. How do you, you've been blogging for over 20 years.

30:06How do you avoid the temptation to just fire off all your ideas via tweet and actually commit to the blog? I'm never tempted to do that. I like to think things out. I do too. I just don't. I feel a word more when I write properly. I've actually blogged every single day for over 22 years. That's amazing. That's amazing. Most people gave up. And so what's the difference? I don't feel it requires any discipline for me. The discipline is not writing more. Like I have to restrain myself. So I guess I'm just weird. I don't think I have any like neat little trick or formula. It's one of these niches that you can do now that you couldn't do before.

30:45And I found my niche as have the two of you. Here's a slightly different question playing on that theme, but going back to the intro, how different do you think your blogging career would have been had chatbots existed 10 or 20 years ago when you were starting out? I don't think we know yet. My intuition is that people still want to read human writers simply because they're human. And if the bot is as good as you, most of the world doesn't care. But that has not truly been tested yet. I think we'll see in the next two years. But that's what I'm expecting. Just I think in music, there'll be plenty of AI music.

31:24It might be, say, 10 or 20 percent of the music sector. But listeners will still want that human to human connection.

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34:30They called it a micro blogging site as if it were just blogging, but on a shorter basis. But I think it's fundamentally different, you know, in the early the glory days of blogs, which we'll be talking about forever when we're all very old people, how good it was. You know, I think there there's this sort of spirit of, you know, liberal linking with each other and idea exploration, whereas Twitter strikes me as much more conflictual and one-upmanship and so forth. Do you think there are like fundamental, I don't know if political is the right word, but like new communication paradigms, like sort of have their own terroir, so to speak, in terms of the impulse towards collaboration or conflict, et cetera.

35:12And does that change society? Yeah, I still like blogging, and I'm sad people have moved away from it. Twitter, to me, it seems too meme-heavy, and meme-heavy media have more potential for racism, which, of course, is a big negative. And I see so many people who are driven crazy by being on Twitter, whether it's because they're writing on it or reading it. I'm not sure. Maybe both. I don't want to name names, but it's a lot of people, and I bet you see the same ones that I do. Also very sexist nowadays, I would just add, in unappreciated ways. In many ways. Speaking of sexism, the impact of AI on economics.

35:48Talk about that. Economic institutions, you know, famous for modeling and spend a lot of time with numbers and things like that. Is that all just going to be replaced by AI? Not all. So I think what human economists will do is put more and more time into gathering data and feeding it to the AIs. The returns to doing that will be very high. But the actual econometric statistics, humans will maybe set up part of the problem, but the hard, boring routine work will be done by the machines, as to some extent it was already the case. And this will be a way to make a lot of progress rather quickly. Do the actual economic statistics or data points that economists collect, do some of those need to be changed or thought of differently in light of the AI era?

36:36Well, I don't know. Eventually they will need to be. But I would say any period of radical change in history, your statistics are less useful. It's not that the people creating the statistics are making some mistake. You just cannot capture every way the world is changing. An index number comparisons require the basket of goods be relatively close to constant. And at some point that doesn't hold anymore. And we'll be faced with that. We'll deal with it. I would say the current statistics we have, they're more underrated than overrated. So they're actually pretty good. And I'll be glad when we get them back again.

37:14There's another thing, the tech people you talk to, they must think like GDP is terrible. It doesn't capture all this stuff, all this value that we can't price. I'm sure you've had conversations explaining to many AI workers that GDP is not the worst statistic in the world. I want to go back, though, to. So, you know, you mentioned like on Twitter, right? You say something, someone posts a meme, they dunk on you, they make fun of you, they whatever. Your chatbot won't do that. Like if I'm having a conversation with Chad GPT, it's never going to respond to me with a meme sort of indicating one day.

37:49One day it might. One day it might that I'm a moron. It'll learn your language, Joe. Yeah. But if anything, it's too obsequious. Right. I mean, the issue is like the online world has become this very like sort of competitive, conflictual world. And then I go to the chatbot and my complaint is literally the opposite. It doesn't challenge me enough. It's too obsequious. Every question I ask, it's a great question. Sometimes I wish it would call me a moron a little bit more. But what does it change about the world? We know that like many people's brains have been broken by social media and that probably has downstream effects on how our politics operates these days.

38:21What does it do to the world if we started inhabiting these chat environments where they're just very sort of polite. And every time you say something, it says, yes, great thought, Tyler, great thought, Joe. Would you like to expand it? You asked the perfect question. Do you see that having sort of second order effects on how society operates? Well, that's the 4.0 model that does that. The newer models like Claude 4.5 and GDT5, they're more objective and that's better. But they never make fun of you. They never will like say you're a moron. And how could you possibly how could you possibly ask such a dumb question?

38:57You are obviously so out of touch for having the ex ask this. This is like in some respects, this is a very positive change from many of the conversations that I've had from typing into a computer. Oh, it's great. I think people should be nicer to each other. And I think they're the most objective media source the human race ever has had. if you ask it about, say, vaccines or conspiracy theories, it basically gives you the right answers. Well, one thing that they don't do, and I mean, I do think they can be trained to be mean to you and to insult you to a certain degree. And you can decide - They could be, but I never encounter them.

39:34Try harder to. And someone will market that more readily on tap, right? So we spoke to the chief business officer of perplexity, Dmitry Shevolenko. We spoke to him recently. And he was saying that one thing chat models can't do is express a natural curiosity, which I thought was kind of weird coming from him because perplexity is the only model I know that actually throws out those additional questions if you query it. And then it comes up with, would you like to have more information on this point? Or are you thinking about this now? But there does seem to be an element of creativity, perhaps, that is lost in some of these LLMs.

40:09How much does that change things in media? The idea that, you know, the models are going to spit out something that's sort of predestined in many ways. Well, that's what most humans do, to be clear. But it's now the case that on a regular basis, the models, say, can prove new theorems in math or discover new potential drugs. And keep in mind, you know, a year ago, these things thought the word strawberry had two R's and now they're winning gold medals in math Olympia. So a year or two from now, maybe we don't know how much better they'll be, but I don't think they're going to have any problems being creative, certainly more creative than humans on average.

40:50So now I have to ask, since we're talking about being mean or nice to the models and them being mean or nice to you, do you say please and thank you in your LLM queries? You know, I used to. And then Sam Altman said, well, it costs us just a little bit of money because of the extra tokens. And then I thought I'll hold off on this. but I have this pre-existing record of saying please and it knows that and then it knows I stopped when Sam said to stop and I think I'll get points for both of those decisions. See I actually find if you're slightly meaner to the models in your queries they perform slightly better much like interacting with Joe.

41:29No comment on that. You know what I do I have said which is I'll like I'll have a query and it'll respond and I'll say that was a little on the nose. Wasn't it? Like it over... I'll say do better perplexity. And then it does. Yeah. I've said like do better. I've said things like that. I was like, this is really on the nose. This response was a little bit trite, don't you think? Et cetera. Like I do feel like I've gotten more comfortable at, let's be real here. You're not doing your best job here. What do you think is like, it's interesting. I get that they win the gold medals and the math and et cetera.

42:09Like I've had so many conversations with the chatbots that are on some level like mind blowing. The what the capabilities I've never seen a chatbot query that is like interesting. Like that is like, oh, that is like a really interesting, maybe one I can think of, but there was like a really interesting thought. I feel like my children still say on a daily basis, more like interesting things that get me thinking than I've ever gotten from a chatbot does that resonate to you at all i don't know i feel like you've said so many more things in this hour than any than any interesting thing like actually like interesting ideas than i've ever got from the hours i've spent playing with chat gpt or claude you know i use mine a lot for music so if i'm going to listen to sebelius's fifth symphony i'll just ask it what should i listen for and i'll say this is tyler owen asking which i hope raises the quality of the answer it knows a lot about me yeah and what it gives me to listen for i find is better than any human source i can access readily it's better i that i agree with but like does it make a connection does it like tell you something about sebelius's music that is like oh that's a very interesting that's a novel way of thinking about what makes it profound these are the things that i rarely ever encounter something that's like oh that is an interesting thought, because I feel like if I were talking to a musicologist for an hour, I would get infinitely more like actual insight into something that makes the music special.

43:38Something I hadn't heard before. I don't know if it's novel, because I don't really know the Sebelius literature. But most musicologists I find pretty boring. And I find, say, GPT-5 on a classical symphony quite to the point. And whether or not it's original, it's not that important to me. It helps me listen to the music better. And it's certainly original relative to the other sources at my disposal, say Wikipedia or what I could Google to. So I think for almost all purposes, that's enough. Does it have a truly original idea in the sense that Einstein's theory of relativity when he came up with it was original to him?

44:18I don't think so. That may come in some number of years. But again, for almost all purposes, that's not what we need. We need something better than our pre-existing state of knowledge. And on that, I think it just cleans up. So I just asked Perplexity, what music I should recommend to Tyler Cowen? And it said that in order to recommend effectively to Tyler Cowen, I need to look for underappreciated recordings and obscure things that no one except him might have ever heard about. um and good answer and it recommended i mean boy genius seems pretty on the new on the nose yeah right um reggae acts like toots and the maytals yeah this is so is that a good one no i've seen them in concert yeah tyler's price is all 20 of the records so it's just scraping stuff that you've already talked about it's not it's not even trying yeah all right well you need to make the prompt more exacting.

45:13Rule out anything Tyler has talked or written about. Give me something he doesn't know and try GPT-5 in the pro mode. And I think it will succeed. Well, so on this note, this is something I've been asking everyone, but like, what is an example in your mind of a really good prompt or one that sticks out to you that has generated something that, you know, maybe you didn't expect? You know, Dwarkesh Patel once wrote a very good prompt and he shared it with me. when I interview some podcast guests, it's really a long prompt. It's in hundreds of words. And it asks, what questions should I ask them?

45:49Then it goes into great detail. It should be a unique question. It should be a question they were not asked anywhere else. Then it's give me what you think their answer might be and what would be my follow-up question. And give me some cases where you think their answer might be wrong. And it goes on and on. And you run that through the very best models, I think you get good results. Yeah. No, I've, you know, I've run transcripts of the podcast before and I say like, well, where should I have pushed the guest harder on? What were the weak answers that they, what were the inconsistencies that the guest had over the time?

46:23And I've found it to be a very useful exercise for things like that. So I do think like, That's the thing, which it is objectively impressive on many of these fronts. And I would say objectively useful if you do sort of a detailed prompting. I'm just curious, what's your, like, from the professor perspective, what do you think is the right way to think about how students will be using Chachi B. I mean, I know that there's a million opinions in academia about what's the right way to test now? What's the right way to deal with essays, et cetera? How are you thinking about some of these challenges?

47:04We should devote one third of all higher education to teaching students how to use AI. And right now that's close to zero. So we don't have the faculty who can teach it as part of the problem. Often the students know more than the professors. Yeah, I'm sure. but we need to restructure radically what we do because future work will be done with AIs so that's the thing to teach but like so just to play devil's advocate like intuitively I still feel like there is value in long periods of time cut off reading where you're not looking at devices where you're training your body to sort of be disciplined and pay attention and focus I still think memorization of facts and numbers and dates and places and names is very useful in actually having them in your head, et cetera.

47:55Does that seem right to you or is that sort of a retro thinking on my part? No, strong agree. And most of all writing, but that's the other two thirds of higher ed, right? I said one third should be AI. Oh yeah. So tell us about the other two thirds. We should, with or without AI, just teach students much more and much better how to write. Most people can't write. Writing is thinking. We should do much more to teach writing and test writing. And now with AI, that has to be face-to-face in a controlled environment, or people are just going to cheat. So that we should have doubled down on to begin with.

48:31So that and just numeracy and basic issues like how to manage a portfolio, what kind of mortgage to take out. There are classes that cover those things, but I think they ought to be front and center of any curriculum. Basic finance, basic life decisions, like how to choose a doctor, how to prompt the AI for diagnosis, whatever, are relatively neglected in a lot of education. That to me just seems crazy. I want to ask one market question before we go, which is obviously, there's a lot of talk about an AI bubble at the moment. And I think the concern from a lot of people is when you start talking about a new technology as revolutionary, when you start talking about how the effects are basically going to be infinite and the market size is hypothetically the entire world, there's a risk that expectations overshoot reality, right?

49:24And we have seen some people voicing their worries about that right now and a little bit of nervousness creeping into the market in terms of valuations. Where do you stand on the AI bubble? Do you see signs of froth or do you think most of the CapEx spending is justified at this point? I don't like the word bubble. I would point out that tech sector earnings are exceeding tech sector capital expenditure. This is not mostly debt financed, so we're in less trouble than many people think. It wouldn't shock me if a lot of these efforts lost money. That was the case with the railroads, the case with the internet, case with most things humans have done.

50:03But I think it will endure. It's not like pets.com where the thing just gets swept away. These are incredibly well-capitalized, highly skilled companies where the CEOs and our founders are quite committed to doing this, and they're going to see it through, and they're going to succeed. But does that mean every share value will go up or NVIDIA ends up being worth$10 trillion? I don't know. I wouldn't necessarily predict that. There's always ups and downs, but this is clearly a very useful thing. And we as Americans, we're going to make it work, and we're way ahead of the rest of the world. Like three quarters of all AI compute is in this country.

50:39That's incredible. We're at what percent of the world's population? Six or I don't know, but way smaller than three quarters. GPT-5 on Thinking Mode says you should listen to Michael Gulesian, who does dreamlike acoustic guitar using an open tuning. And it said that given your affinity for guitarists like John Fahey and Leo Kotke, you'll appreciate him. Send me that answer. It sounds excellent. I haven't heard of that person. I do very much like guitar with open tuning. Kishore Amankar, a Hindustani vocal singer. It thinks you'll like Sun O. M.D. Badrul Haak. I'll send you this list. And Katerina Barbieri, modern modular minimist electronic composition.

51:24So I will buy some of these. Wait, how about a human recommendation? Give us a recommendation. A human recommendation. Since you said that, you know, country is pretty good right now, but I guess you personally aren't that into it. But have you tried Orville Peck? I think there's a new album out this week, I think. What kind of music is it? Country, but like a very modern type of country. I've tried to get Joe into it, but I'm still working on it. I like some country and I love old country with Hank Williams, Johnny Cash, Jett Atkins period. It has a vintage tone to it, but with a modern twist.

52:05Try Orville Peck. And then get back to us about which was better in terms of the recommendations. Tyler Cowen, thank you so much for coming on OddLot. Long overdue conversation. Really appreciate you taking your time. Great to chat with you both.

52:34Tracy, a lot to pull out from that conversation. I think it's very interesting that early observation he made about sort of legacy institutions and whether perhaps some of the sort of lack of revolutionary impact yet is just about that metabolization process into the types of companies that could theoretically absorb them. Yeah. I mean, I think that's exactly it, right? So companies are using this mostly as an add-on to existing workflow. You're not going to get the huge productivity boom until companies are sort of centered. Build from the ground up. Yeah, which is probably going to take people who grew up with the technology rather than old people like you and I who just adopted it.

53:18The other thing I was thinking about, first of all, insurers are sort of a pet interest of mine at the moment. But I do think they are emerging as some of the really big winners from a lot of, I guess, the data saturation of the world right now and the increased sophistication of analytical models and things like that. And that'll be very interesting to see how it shakes out. And if you took it very, very far as a sort of thought experiment, you could start to say that, well, the insurers are going to be a more important actor in terms of setting social standards and regulations in the future.

53:54Because they're the ones with the data doing all the modeling and saying, like, you have exactly an X chance of being in a car accident. And therefore, you must do the following things, right? I thought also like I hadn't really thought about, you know, subpoena ability is a very big issue. But it is interesting, right? Like it is a little weird that you and I could have a phone conversation. Now, if you're under oath and they say, what did you talk about, Joe? I expect you to probably tell the truth unless it was very bad for me. And I would hope that you would lie. That's right. I would hope that you would.

54:29I would hope that you would. That's your hope. I would hope that you would. Perjure myself to save Joe. Yeah, I would hope that you would perjure yourself. But like, you know, you theoretically can get away with it. So yeah, but if we have an email, there's no chance. And it's sort of interesting. It's sort of, it's always seemed a little bit arbitrary to me. But it is interesting to think about like, okay, can we have a conversation with these entities? And like, why do we have to leave a digital record? And where are these going to be stored? And I do think in areas like health and law, which are obviously, not obviously, but sort of intuitively low hanging fruit for product productivity.

55:03gains. How much have we not seen just in part because we're still sort of negotiating the transition process as a society? What are going to be the new rules and norms about this stuff? Where is it going to be housed, et cetera? I think that's actually a sort of very interesting question or space. This is the space to watch, so to speak. Now that I think about it, we probably should have discussed some of the regulatory framework around all of this a little bit more, but next time. Next time. But the other thing I've been thinking about lately is economic statistics in a world that's increasingly driven by AI.

55:38And I know that we had the big productivity discussion and technology in relation to technology in like the sort of early to mid 2000s. I'm not sure that ever actually got settled. But I very much expect that the AI economic statistics conversation is going to be even like wackier. because I'm not sure how you do things like quality adjustments for something that like suddenly comes with its own brain and stuff like that. No, it's going to be super weird. I did. I don't know. In my mind, I have like a very these images of like Tyler getting a tour through the, you know, ChatGPT offices. And the people ask me, I was like, and him having to explain that, you know, we're not going to have 20 % GDP growth at maybe two and a half or sorry, productivity growth and And actually, GDP isn't really that bad of a measure.

56:29It more or less captures the size of the economy, even if a lot of Internet things are free, like some of these classic conversations. I would like to be a fly on the wall for some of those. Tyler Cowen, in defense of GDP. Yeah. All right. Shall we leave it there? Let's leave it there. This has been another episode of the All Thoughts podcast. I'm Traci Alloway. You can follow me at Traci Alloway. And I'm Joe Weisenthal. You can follow me at The Stalwart. Follow our guest, Tyler Cowen. He's at Tyler Cowen. And of course, check out his podcast, Conversations with Tyler, and in addition, of course, Marginal Revolution.

57:05Follow our producers, Carmen Rodriguez at CarmenArmand, Dashiell Bennett at Dashbot, and Kale Brooks at Kale Brooks. From our OddLots content, go to Bloomberg.com slash OddLots. We have a daily newsletter and all of our episodes. And you can chat about all of these topics 24-7 in our Discord, discord.gg slash oddlots. And if you enjoy Odd Lots, if you like it when we talk to Tyler Cowen and give him music recommendations, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free.

57:37All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

57:53Thank you.

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