Investors are pricing in a 32.6% AI productivity boost for software engineers
Economists turn stock movements into an estimate of anticipated gains – while warning that markets can get carried away
Economists from the University of California, Berkeley and the London School of Economics and Political Science estimate AI will boost software engineering productivity by 32.6 percent between 2022 and 2025, according to a recent study. The researchers found that investors have priced in these anticipated gains into company valuations since the release of ChatGPT in November 2022.
By analyzing stock market movements, the economists determined that AI increased the market's expected present value of software engineering productivity by a permanent 32.6 percent. While the study does not directly measure employment trends, it suggests that total software engineering employment among covered firms has increased.
The productivity improvement, comparable to task-level gains reported by other researchers, could result in a permanent 3.61 percent increase in GDP. The researchers caution that market expectations may not fully materialize and that productivity gains in software engineering could potentially be extended to other industries.
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