Will AI mainly make existing goods cheaper, or create entirely new products, services, scientific projects, and consumer desires?
Bessen's finding: automation raises employment where demand is elastic. Whether AI creates new wants — as electricity and computing did — or merely cheapens old ones largely decides the labor-market outcome.
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The demand side got its first real number: choice experiments put US consumer surplus from generative AI near $172 billion — roughly ten times producer revenue. The argument moved too: Cowen on why AGI-era demand doesn't stall, and Smith on value coming from cognition humans do badly, not human tasks done cheaper.
total consumer surplus from generative AI in the United States reached $172.3 billion in early 2026
Willingness-to-accept experiments: consumer surplus ~10× producer revenue, growing ~50% in eight months.
AI's value comes from replicable cognition, tacit-knowledge extraction, and pattern discovery — new frontiers rather than cheaper human tasks.
Argues demand shortfalls will not cap AGI-era growth: new high-marginal-utility goods, price adjustment, wealth effects.