Adriana Kugler

Adoption headlines suggest a technology sweeping through the economy. The harder question is whether companies are building anything new with it, because that is what actually shows up in growth. Here is a number you have probably seen some version of: roughly one in five firms and businesses are now adopting AI, according to Census data . It sounds like a technology spreading fast. And in a sense, it is. But adoption figures answer the easy question, the one about whether companies have brought the tool in the door. They say nothing about the harder and more important question, which is what those companies are actually doing with it once it arrives. That second question is the one I care about, because it is the one that decides whether all this activity adds up to a stronger economy. A tale of two adopters Imagine two companies that both report adopting AI. They look identical in the statistics. The first uses AI to trim expenses. It automates a few routine tasks, speeds up some pap...

Making a powerful technology cheaper does not always shrink demand for it. Often it does the opposite, and that pattern is worth keeping in mind as the cost of running AI falls. Most coverage of artificial intelligence focuses on what the technology can do. The figure I keep coming back to is a quieter one: what it costs to run. That number, more than any single capability, will shape how far AI spreads and how much it ultimately changes the economy. The number behind the question There are estimates suggesting that the cost of processing for a model with one trillion parameters could fall by roughly 90 percent by 2030. That is not a modest discount. It is the price of a powerful capability dropping to a tenth of what it is today. The instinct, when a price falls like that, is to assume spending on it falls too. Cheaper AI, lower AI bills, end of story. But that instinct is usually wrong, and the reason has a name. Efficiency does not lead to thrift It is called the Jevons paradox: im...