AEA Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
The Unreasonable Effectiveness of Algorithms
AEA Papers and Proceedings
vol. 114,
May 2024
(pp. 623–27)
Abstract
We calculate the social return on algorithmic interventions (specifically, their marginal value of public funds (MVPF)) across multiple domains of interest to economists—regulation, criminal justice, medicine, and education. Though these algorithms are different, the results are similar and striking. Each one has an MVPF of infinity: not only does it produce large benefits, it provides a "free lunch." We do not take these numbers to mean these interventions ought to be necessarily scaled but rather that much more research and development should be devoted to developing and carefully evaluating algorithmic solutions to policy problems.Citation
Ludwig, Jens, Sendhil Mullainathan, and Ashesh Rambachan. 2024. "The Unreasonable Effectiveness of Algorithms." AEA Papers and Proceedings, 114: 623–27. DOI: 10.1257/pandp.20241072Additional Materials
JEL Classification
- C45 Neural Networks and Related Topics
- H43 Project Evaluation; Social Discount Rate