2017 - 18 Year in Review

25 PUBLIC POLICY IN AN AI ECONOMY This paper considers the role of policy in an AI-intensive economy (interpreting AI broadly). It emphasizes the speed of adoption of the technology for the impact on the job market and the implications for inequality across people and across places. It also discusses the challenges of enacting a universal basic income as a response to widespread AI adoption; discusses pricing, privacy, and competition policy; and concludes with the question of whether AI could improve policy-making itself. INTERNET RISING, PRICES FALLING: MEASURING INFLATION IN A WORLD OF E-COMMERCE We (Goolsbee and coauthor Peter J. Klenow) use Adobe Analytics data on online transactions for millions of products in many different categories from 2014 to 2017 to shed light on how online inflation compares to overall inflation, and to gauge the magnitude of new product bias online. The Adobe data contain transaction prices and quantities purchased. We estimate that online inflation was about 1 percentage point lower than in the consumer price index (CPI) for the same categories from 2014 to 2017. In addition, the rising variety of products sold online implies roughly 2 percentage points lower inflation than in a matched model/CPI-style index. Austan D. Goolsbee Robert P. Gwinn Professor of Economics