AI Needs to be REGULATED

For most of the past decade, public concerns about digital technology have focused on the potential abuse of personal data. People were uncomfortable with the way companies could track their movements online, often gathering credit card numbers, addresses, and other critical information. They found it creepy to be followed around the web by ads that had clearly been triggered by their idle searches, and they worried about identity theft and fraud.

Those concerns led to the passage of measures in the United States and Europe guaranteeing internet users some level of control over their personal data and images—most notably, the European Union’s 2018 General Data Protection Regulation (GDPR). 

Of course, those measures didn’t end the debate around companies’ use of personal data. Some argue that curbing it will hamper the economic performance of Europe and the United States relative to less restrictive countries, notably China, whose digital giants have thrived with the help of ready, lightly regulated access to personal information of all sorts. (Recently, however, the Chinese government has started to limit the digital firms’ freedom—as demonstrated by the large fines imposed on Alibaba.) 

Others point out that there’s plenty of evidence that tighter regulation has put smaller European companies at a considerable disadvantage to deeper-pocketed U.S. rivals such as Google and Amazon.

But the debate is entering a new phase. As companies increasingly embed artificial intelligence in their products, services, processes, and decision-making, attention is shifting to how data is used by the software—particularly by complex, evolving algorithms that might diagnose a cancer, drive a car, or approve a loan. 

The EU, which is again leading the way (in its 2020 white paper “On Artificial Intelligence—A European Approach to Excellence and Trust” and its 2021 proposal for an AI legal framework), considers regulation to be essential to the development of AI tools that consumers can trust.  READ MORE...

World Economic Outlook

One chaotic, disappointing year is ending. Another one is likely in store. In October, the IMF released its annual economic outlook projecting weak growth across the world in 2023. It placed particular emphasis on three issues: high inflation and central bank tightening, Russia’s invasion of Ukraine, and the continued effects of Covid—especially in China.

HBR asked three experts about what to expect for the economy in 2023, and how things have evolved since October.

Mihir Desai is a professor of finance at Harvard Business School. Karen Dynan is a professor at Harvard and a senior fellow at the Peterson Institute for International Economics. And Matt Klein is an economic journalist and the author of The Overshoot newsletter. We put the same questions to all three; their replies, edited for length and clarity, are below.
Let’s start with inflation and interest rates: Where do things stand as the year comes to a close?

Mihir Desai: We’ve lived through a seismic change in rates that we’re still digesting. Those belated increases, along with improving supply-chain considerations, have done well in improving the inflation outlook. But the effects of those interest-rate increases are still being felt in terms of consumer behavior, firm investment plans, and asset prices.

While the runaway aspects of inflation have ameliorated, we are well below a sustainable rate of inflation. The final push toward sustainable inflation levels will require a longer period of sustained higher rates than people imagine. Said another way: Getting to 4-5% inflation will happen by May 2023, but getting back to 2%-3% inflation will take longer and be more painful, triggering a sustained debate regarding the dual mandate of the Federal Reserve.

Karen Dynan: Inflation is very high no matter how you cut it. I would put the underlying trend in the United States at around 5%, which is way above the Fed’s target and the highest level in four decades. Interest rates have risen sharply over the past year as a result of the higher inflation and the Fed tightening in response. Rates on new mortgages have more than doubled relative to where they were a year ago. They touched 7% in October and November, a level we have not seen since the early 2000s.

Matt Klein: The inflation of the past few years has been attributable to the pandemic and, to a lesser extent, to the Russian invasion of Ukraine. Sudden changes in businesses’ ability to produce collided with sharp changes in the mix of goods and services that consumers wanted to buy, leading to both gluts and shortages across the economy.

The good news is that most of the inflation attributable to these one-off factors seems to be on its way out. Overall inflation probably peaked over the summer. The bad news is that there also seems to have been a modest uptick in the underlying rate of inflation from around 2% a year to 4-5% a year.  READ MORE...

Web3 A New Era Internet

Some call it the next phase of the internet. Some say it's a fast-money scam that'll fall apart. But what exactly is Web3?

The phrase "Web3" is used broadly to refer to a new-era internet that will run on the record-keeping technology blockchain, a decentralized public accounting system. The current iteration of the internet, Web2, by comparison, runs on centralized, company-owned servers.

WHAT IS IT?

Web3 "offers a read/write/own version of the web, in which users have a financial stake in and more control over the web communities they belong to" by enabling users to own their data, according to the Harvard Business Review.

Investors hope this version of the internet will lead to a democratization of data on the web, where transactions and contracts can be double-checked by all users. However, consumers should be skeptical, according to venture capitalist Joe Lonsdale, as mainstream products have yet to materialize despite heavy cash investments.  READ MORE...

Reducing Prosocial Reparative Behaviors

A series of studies have uncovered a causal relationship between mindfulness meditation and decreased feelings of guilt. The findings have been published in the Journal of Personality and Social Psychology.

Several studies have found that mindfulness meditation draws people’s focus inward and reduces negative emotions. But some negative emotions provide useful social feedback. For example, feelings of guilt help to push individuals to atone for their transgressions against others. The new study provides evidence that mindfulness can lead to undesirable outcomes by dampening feelings of guilt.

“I was interested in doing this research because, after I started studying meditation and meditating myself, I noticed that I was using it as almost a default way of reacting to stressors,” said study author Andrew C. Hafenbrack, an assistant professor at the University of Washington. “This was great when I was overly ruminating or overreacting to some minor problem, and is a powerful sleep aid. Sometimes, however, this meant that I would meditate or focus on my breath in situations that there was actually a significant problem and it would have been better if I had faced it directly and immediately.”

“I had some confidence that I was not alone in this when I read a Harvard Business Review article by medical doctor and executive coach David Brendel in 2015, where he described that he ‘worked with clients who, instead of rationally thinking through a career challenge or ethical dilemma, prefer to disconnect from their challenges and retreat into a meditative mindset. The issue here is that some problems require more thinking, not less.'”

“I also know several people who are into mind-body practices, including but not limited to mindfulness meditation, but who are unusually flaky or otherwise don’t treat other people particularly well. So I wondered what was going on. It seemed to go against the essence of what I thought mindfulness and meditation were supposed to do, which is largely due to the associations I had based on the traditional or religious forms.”

The researchers conducted eight separate experiments, which included more than 1,400 participants. In the studies, the participants were randomly assigned to either listen to an 8-minute guided meditation recording created by a professional mindfulness meditation instructor or an 8-minute recording by the same speaker in which they were instructed to think of whatever came to mind.  READ MORE...