Some Simple Economics of AGI

[2602.20946] Some Simple Economics of AGI Support arXiv on Cornell Giving Day! We're celebrating 35 years of open science - with YOUR support! Your generosity has helped arXiv thrive for three and a half decades. Give today to help keep science open for ALL for many years to come. Donate! --> Economics > General Economics arXiv:2602.20946 (econ) [Submitted on 24 Feb 2026 ( v1 ), last revised 25 Feb 2026 (this version, v2)] Title: Some Simple Economics of AGI Authors: Christian Catalini , Xiang Hui , Jane Wu View a PDF of the paper titled Some Simple Economics of AGI, by Christian Catalini and 2 other authors View PDF HTML (experimental) Abstract: For millennia, human cognition was the primary engine of progress on Earth. As AI decouples cognition from biology, the marginal cost of measurable execution falls to zero, absorbing any labor capturable by metrics--including creative, analytical, and innovative work. The binding constraint on growth is no longer intelligence but human verification bandwidth: the capacity to validate, audit, and underwrite responsibility when execution is abundant. We model the AGI transition as the collision of two racing cost curves: an exponentially decaying Cost to Automate and a biologically bottlenecked Cost to Verify. This structural asymmetry widens a Measurability Gap between what agents can execute and what humans can afford to verify. It also drives a shift from skill-biased to measurability-biased technical change. Rents migrate to verification-grade ground truth, cryptographic provenance, and liability underwriting--the ability to insure outcomes rather than merely generate them. The current human-in-the-loop equilibrium is unstable: eroded from below as apprenticeship collapses (Missing Junior Loop) and from within as experts codify their obsolescence (Codifier's Curse). Unverified deployment becomes privately rational--a Trojan Horse externality. Unmanaged, these forces pull toward a Hollow Economy. Yet by scaling verification alongside agentic capabilities, the forces that threaten collapse become the catalyst for unbounded discovery and experimentation--an Augmented Economy. We derive a practical playbook for individuals, companies, investors, and policymakers. Today's defining challenge is not the race to deploy the most autonomous systems; it is the race to secure the foundations of their oversight. Only by scaling our bandwidth for verification alongside our capacity for execution can we ensure that the intelligence we have summoned preserves the humanity that initiated it. Comments: JEL Classification: D82, D83, J23, J24, L23, O33. 112 pages, 3 figures Subjects: General Economics (econ.GN) ; Artificial Intelligence (cs.AI); Computers and Society (cs.CY); Machine Learning (cs.LG); Social and Information Networks (cs.SI) ACM classes: J.4; K.4.3; I.2.11; K.4.1 Cite as: arXiv:2602.20946 [econ.GN] (or arXiv:2602.20946v2 [econ.GN] for this version) https://doi.org/10.48550/arXiv.2602.20946 Focus to learn more arXiv-issued DOI via DataCite Submission history From: Christian Catalini [ view email ] [v1] Tue, 24 Feb 2026 14:29:45 UTC (450 KB) [v2] Wed, 25 Feb 2026 17:41:07 UTC (452 KB) Full-text links: Access Paper: View a PDF of the paper titled Some Simple Economics of AGI, by Christian Catalini and 2 other authors View PDF HTML (experimental) TeX Source view license Current browse context: econ.GN < prev | next > new | recent | 2026-02 Change to browse by: cs cs.AI cs.CY cs.LG cs.SI econ q-fin q-fin.EC References & Citations NASA ADS Google Scholar Semantic Scholar export BibTeX citation Loading... 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