How to Die Optimally – A Theory of Consumption When AI Takes Your Job (ngrislain.github.io)

A recent paper explores an intriguing economic model that examines how individuals might optimize their consumption patterns when faced with the decline of labor income due to technological advancements, particularly AI. The model presents a scenario where agents, witnessing their income eroding—like translators threatened by machine translation or taxi drivers by autonomous vehicles—must navigate their financial futures by calculating the optimal point to cease economic activity. The research introduces a two-equation system that contrasts the consumption strategies of a rational planner versus a hand-to-mouth consumer, revealing that the former can significantly extend both the quality and duration of economic life by strategically managing consumption above necessary subsistence levels. The significance of this study lies in its implications for the AI/ML community as it highlights the economic repercussions of AI-driven productivity on labor markets. By integrating factors such as rising rates of return on capital, the model predicts a critical threshold beyond which an economic agent could potentially sustain an indefinite lifespan. This notion of "living forever" through optimal consumption contrasts starkly with the more vulnerable hand-to-mouth approach, suggesting that financial planning in the age of AI can drastically alter life outcomes. The findings serve as a wake-up call for individuals and policymakers, indicating the necessity of strategic resource management in an era increasingly defined by automation and AI advancements.