The Unreasonable Effectiveness of Algorithms

Jens Ludwig, Sendhil Mullainathan and Ashesh Rambachan

No 32125, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We calculate the social return on algorithmic interventions (specifically their Marginal Value of Public Funds) across multiple domains of interest to economists—regulation, criminal justice, medicine, and education. Though these algorithms are different, the results are similar and striking. Each one has an MVPF of infinity: not only does it produce large benefits, it provides a “free lunch.” We do not take these numbers to mean these interventions ought to be necessarily scaled, but rather that much more R&D should be devoted to developing and carefully evaluating algorithmic solutions to policy problems.

JEL-codes: C45 C54 D61 H40 I00 K00 (search for similar items in EconPapers)
Date: 2024-02
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Published as Jens Ludwig & Sendhil Mullainathan & Ashesh Rambachan, 2024. "The Unreasonable Effectiveness of Algorithms," AEA Papers and Proceedings, vol 114, pages 623-627.

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