AGI and the EMH: markets are not expecting aligned or unaligned AI in the next 30 years
AGI and the EMH: what does the market tell us about AI timelines? TLDR: Markets are not putting much probability on the development of transformative AI (aligned or unaligned!) in the next 30-50 years – as evidenced by low *real interest rates*
This thread is based on new work with and , full post here: forum.effectivealtruism.org/posts/8c7Lycgt… We show *real interest rates* would be high if markets were expecting transformative AI But long-term real rates are low!
(By “transformative AI”, we mean the truly radical changes envisioned in the EA/AI safety communities: - a 10x increase in GDP growth — as Davidson (2021) notes, on the scale of the industrial revolution – or - AI-induced human extinction, ie the “unaligned AI” of Yudkowsky/etc)
Real interest rates are interesting here because -- Real rates are high when (1) growth is high, or (2) probability of death is high SO: real rates would be high if markets were expecting (1) aligned AI (explosive growth), or (2) unaligned AI (existential risk)
(1) Why high expected growth pushes up real rates: If I expect to be astoundingly rich in 2040, there’s no reason to save today, because I’m going to be rich => lower supply of saving pushes up the real rate
You can see this even in a simple cut of the data: strong correlation between real interest rates and future growth [AFAIK this simple stylized fact is novel – unlike us, existing lit doesn’t use real rates from inflation-linked bonds (!), and so measures real rates very badly]
(2) Why high existential risk pushes up real interest rates: If I expect a high probability of being dead in 2040, I'm not going to be willing to lend much today, because I probably won't be around to enjoy the payoff of the loan => lower supply of lending pushes up real rate
Again: either of these – future GDP explosion or extinction risk – would be much more likely if the market was expecting transformative AI => real rates at (say) a 30y horizon would be high, if market was expecting TAI in the next 30 years But 30y real rates are low!
- US 30y real rate on TIPS 1.4% - UK 30y real rate is 0.7% - even UK 50y real rate is 0.7% (!!) - other countries with real bonds are similar => real rates are low at 30-50 year time horizons => markets are not forecasting transformative AI on a 30-50 year time horizon (!)
In particular, using the simplest possible model, we show that markets are decisively rejecting the shortest possible timelines of transformative AI in 0-10 years: real rates would be absurdly high if the singularity were *that* near
Okay, maybe you think markets are not that efficient, or at least wrong here – maybe put your money where your mouth is then 🤗 There’s easily a trillion dollars on the table, just from shorting US treasuries alone:
You can EASILY make this trade with a number of ETFs 🤗 we give some specific examples in the post 🤗 This is not *not* financial advice 🤗 (Paul Christiano has said publicly he’s short treasuries) “Get rich or hopefully don’t die tryin”, to paraphrase
The post has a lot more analysis and responses to rebuttals – we really tried to keep it maximally concise forum.effectivealtruism.org/posts/8c7Lycgt… “The market-clearing price does not hate you nor does it love you”, as one might say
How I interpret this post: a useful OUTSIDE VIEW on forecasting timelines, which complements but does not completely substitute inside view forecasts (e.g. Cotra 2020) => only *one* model among a mixture of models that you should consider when thinking about AI timelines (!!)
There is a lot of evidence that financial markets are the best information aggregators produced by the universe (so far?) => the (dead simple!) logic here, showing markets are not predicting TAI soon, should be taken pretty seriously
The only serious debate is whether the Efficient Markets Hypothesis is true about *all* asset prices *all* of the time for you, or merely 99.9999% of asset prices. If EMH wasn't true about almost-all prices relative to you, you could trade arbitrary assets and go up 10% per day.
Eliezer Yudkowsky @ESYudkowsky