Economic approach to understanding impact of ML.
Better ML = cheaper predictions
- number of predictions
- engineering effort
- cost of mis-predictions => cost of automating decision-making
Economies of scale for first two.
Declining returns on scale for accuracy but maybe not declining returns on outcome.
- eg better than competitor
- eg crossing cost threshold for deployment
- generalizing out of sample
- generalizing from limited data by analogy to other domain
- inferring causality / countering dependence between decision-making and data collection
- => controlled experiments
Break decision process into components.
- some tasks are replaceable by ML
- others still require humans (= complements)
Complements go up in value as ML tasks get cheaper - leverage.
- eg data capture, sensors
- eg physical automation
Judgment is a strong complement (ie objective / reward functions). Probably needs to stay in-house.
Job = collection of tasks, not monolithic. Grouping will shift but human tasks will remain.
- may need to reengineer orgs to take advantage
- affects C-level strategy - can’t delegate to IT dept
- internal costs vs externalities
- ML predicts outcomes, human chooses preferred outcome
- eg maps offers several routes optimizing for different criteria
- ML acts in high-confidence regions, delegates to human in low-confidence regions
- will your human have experience / attention to handle? eg pilots vs autopilot
- bias => liability
- black swan events
- adversarial inputs
- 99.8 -> 99.9 accuracy is half number of mistakes