AGI and the EMH: markets are not expecting aligned or unaligned AI in the next 30 years

Basil Halperin, J. Zachary Mazlish, and Trevor Chow

January 10, 2023

Abstract

by Trevor Chow, Basil Halperin, and J. Zachary Mazlish In this post, we point out that short AI timelines would cause real interest rates to be high, and would do so under expectations of either unaligned or aligned AI. However, 30- to 50-year real interest rates are low. We argue that this suggests one of two possibilities: Long(er) timelines. Financial markets are often highly effective information aggregators (the “efficient market hypothesis”), and therefore real interest rates accurately reflect that transformative AI is unlikely to be developed in the next 30-50 years.Market inefficiency. Markets are radically underestimating how soon advanced AI technology will be developed, and real interest rates are therefore too low. There is thus an opportunity for philanthropists to borrow while real rates are low to cheaply do good today; and/or an opportunity for anyone to earn excess returns by betting that real rates will rise.

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Quotes from this work

Transformative AI would either raise the risk of extinction (if unaligned), or raise economic growth rates (if aligned).

Therefore, based on the economic logic above, the prospect of transformative AI – unaligned or aligned – will result in high real interest rates. This is the key claim of this post.