We continue to see rapid progress with AI development. Here are three observations about the economics of AI:

1. The intelligence of an AI model roughly equals the log of the resources used to train and run it. These resources are chiefly training compute, data, and inference compute. It appears that you can spend arbitrary amounts of money and get continuous and predictable gains; the scaling laws that predict this are accurate over many orders of magnitude.
2. The cost to use a given level of AI falls about 10x every 12 months, and lower prices lead to much more use. You can see this in the token cost from GPT-4 in early 2023 to GPT-4o in mid-2024, where the price per token dropped about 150x in that time period. Moore’s law changed the world at 2x every 18 months; this is unbelievably stronger.
3. The socioeconomic value of linearly increasing intelligence is super-exponential in nature. A consequence of this is that we see no reason for exponentially increasing investment to stop in the near future.

In some ways, AI may turn out to be like the transistor economically—a big scientific discovery that scales well and that seeps into almost every corner of the economy. We don’t think much about transistors, or transistor companies, and the gains are very widely distributed. But we do expect our computers, TVs, cars, toys, and more to perform miracles.

In particular, it does seem like the balance of power between capital and labor could easily get messed up, and this may require early intervention. We are open to strange-sounding ideas like giving some “compute budget” to enable everyone on Earth to use a lot of AI, but we can also see a lot of ways where just relentlessly driving the cost of intelligence as low as possible has the desired effect.