Just about everyone I know is curious about how generative AI like ChatGPT will shape the economy—and, in particular, how typical workers stand to fare.

Alas, there are no crystal balls. Like everything in economics, the answer is likely to be “it depends.”

But I want to draw your attention to some research from Kellogg strategy professor Ben Jones that actually addresses the factors on which it depends. Because, at least to me, these factors are somewhat surprising and offer a novel way of looking at the situation.

Factor 1: Whether AI targets bottlenecks in the economy

The first of these factors is where in the economy the advances happen. If AI addresses productivity bottlenecks in the economy, meaning the places where limited capacity slows down the entire process, then its impact will be vastly greater than if it does not.

To make sense of this, says Jones, “you have to realize something very important about how economies grow: it’s what we’re bad at that really matters.” That is, productivity isn’t dependent on how efficient the economy is at its best, but at its worst.

Many tasks in agriculture are rote and repetitive, and therefore easy to automate. This has allowed the industry to dramatically increase its productivity without running into too many bottlenecks: its slowest, “worst” processes are still pretty darn fast.

Contrast that with another technological advancement: computing. Jaw-dropping advances in computing power have nonetheless not made the economy a lot more productive. Computing is often in service of more cognitive, custom tasks such as legal services, which have historically been harder to automate, leaving lots of bottlenecks. After all, it doesn’t matter how fast your computer can run if every output has to be written or checked manually.

But bottlenecks don’t just slow down growth in a given sector; they have an outsized effect on the entire economy. As a task automates and becomes more productive, it shrinks in terms of its share of the economy. That’s because the output becomes ubiquitous—and inexpensive. (Consider that agricultural output across all of America’s farms is now just 0.7 percent of GDP.) Meanwhile, it’s the least productive tasks—the bottlenecks—whose share of the economy increases over time. This means that, eventually, the bulk of the economy is devoted to sectors that aren’t increasing in productivity at all. This is where most advanced economies find themselves today.

How much AI will transform our economy, then, depends on the extent to which it can increase productivity in these unproductive and expensive parts of the economy, like healthcare, education, hospitality, transportation, or electricity.

Factor 2: Whether AI will perform cognitive tasks a lot better than humans

The second factor that will determine AI’s impact on the economy is whether AI will replace human labor by being just barely better than us or dramatically better.

If AI is good enough to replace humans, but not much better than that (a scenario that is, at least in the immediate term, plausible), this is very bad news for human labor. In this scenario—where AI replaces human labor without dramatically increasing productivity—labor gets a lower share of the income and we don’t see dramatic gains in living standards.

But there’s another, more optimistic scenario here. If AI truly does prove transformative—for example, by allowing a single radiologist to do the work of 15 radiologists, and a single coder to do the work of 15 coders, and so on—then we can expect an explosion of economic growth that will allow all of us to enjoy a higher standard of living (even if a few radiologists and coders need to find other jobs). This will be true even if machines take over the vast majority of jobs, so long as there are at least some tasks for which human labor is required.

To understand why, recall how the share of the economy devoted to bottlenecks will always continue to grow, while the tasks that can be easily automated will shrink. That means that, as automation takes over more tasks, the remaining nonautomated tasks will increase in importance, and humans will be better compensated for doing them. And in this “explosive growth” scenario, the economy will be expanding so quickly that these tasks will pay handsomely indeed.

For a more detailed explanation of these two factors—as well as why Jones hopes we’re all one day “like cellists”—read here.