By Manfred Keil and Sasha Rothstein | Inland Empire Economic Partnership
It has only been three months since artificial intelligence firm OpenAI released ChatGPT, the chatbot so powerful it is already replacing human workers. The AI has spurred mass panic at schools and universities over new ways to cheat, and when added to Microsoft’s Bing search earlier this month, began sending unhinged messages to users. Regardless of whether you think ChatGPT is a harbinger of doom, there is no doubt, it is powerful. Need an original 50-page term paper on Shakespeare in seconds? ChatGPT is your new best friend.
Naturally, we decided to test its knowledge of the Inland Empire economy. ChatGPT can write what experts are calling “fluent BS,” allowing you, perhaps, to ace that literature class you are taking with 400 students. But can it replace economic analysts? To find out, we asked ChatGPT to “write a 500 word economic analysis of the current economic situation in the Inland Empire 2023.” Here is its response in italics (and, of course, our comments below).
“The Inland Empire region of Southern California has experienced significant economic growth in recent years. However, in 2023, the region is facing a number of economic challenges. This economic analysis will examine the current economic situation in the Inland Empire and discuss the key factors driving the region’s economic performance.”
A clean start, but not very original. Just like a high schooler to repeat our prompt back to us in the opening lines.
“The Inland Empire region consists of two counties: Riverside and San Bernardino. The region has a population of over 4 million people and is the 13th largest metropolitan area in the United States. The region has a diverse economy, with significant contributions from industries such as logistics, healthcare, manufacturing, and hospitality.”
Actually, the Inland Empire has just become the 12th largest Metropolitan Statistical Area in the U.S. (take that, SF!). Since that only happened last year, we are willing to give it a marginal pass. Other than that, it looks like our AI friend just scribbled down some random industries and called them significant. Manufacturing only generates 6.7% of employment in the Inland Empire; retail sales and professional & business services are both bigger employers than leisure & hospitality. Then there is the government sector, the second largest employer in the Inland Empire. Maybe ChatGPT thinks that the government’s real contribution to output is negligible. Some of the readers may agree.
Verdict: mostly wrong, with a couple correct statistics pulled straight from Wikipedia.
“One of the key challenges facing the Inland Empire in 2023 is the labor market. The region has an unemployment rate of 7.4%, which is higher than the national average of 4.2%. The pandemic has had a significant impact on the labor market in the Inland Empire, with many businesses struggling to find workers. The hospitality industry, in particular, has been hit hard, with many hotels and restaurants struggling to fill open positions. This has led to wage inflation, with businesses offering higher wages to attract workers.”
An unemployment rate of 7.4%? Maybe one of ChatGPT’s programmers is named Rip Van Winkle and fell asleep in August 2021. The U.S. at 4.2%? In a parallel universe, maybe. The correct numbers are 3.6% for the Inland Empire and 3.4% for the nation. In the real economy you might struggle to find workers, but the AI is saying there’s a tight labor market at 7.4% unemployment — sorry, what?
The AI wraps up this section with a doozy of a claim that wage inflation is on the rise. Maybe it means nominal wages, because when you look at wage increases and inflation together, wage inflation is not our issue. The program suffers from money illusion and we personally find it hard to model insanity, but the AI programmers found a way.
Verdict: This paragraph? 100% fluent BS.
“Another challenge facing the Inland Empire is housing affordability. The region has seen significant population growth in recent years, which has put pressure on the housing market. The median home price in the Inland Empire is $450,000, which is significantly lower than neighboring Los Angeles County but still high for many residents. This has led to a housing crisis, with many families struggling to afford rent or buy a home. The lack of affordable housing is also impacting the labor market, as workers are struggling to find housing close to their place of work.”
Someone has been reading the LA Times letters to the editor section. Yes, housing affordability is a problem everywhere in California, but less so here in the Inland Empire. We pay for it in our two hour morning commutes from Upland to Downtown LA, though, adding another two hours coming back in the afternoon. Points given here for content and a fairly accurate median home price.
Verdict: A bit obvious to talk about California housing, but accurate overall.
“Despite these challenges, the Inland Empire has seen significant economic growth in recent years. The logistics industry, in particular, has been a major driver of economic growth in the region. The Inland Empire is home to the largest distribution center in the world, which has attracted many businesses to the region. The region’s proximity to the ports of Los Angeles and Long Beach has also made it an attractive location for logistics companies.”
All true. However, us humans would make sure to mention the environmental concerns around the Inland Empire’s logistics industry that has landed our region in international news headlines (see the NY Times and The Economist for more); plus, there is a major new development with Governor Gavin Newsom receiving a report by environmental groups asking for a two year moratorium on building warehouses in the region.
Verdict: Veracious verbiage, but missing major recent events that should be included.
“In addition to logistics, the healthcare industry has also been a major contributor to the Inland Empire’s economy. The region is home to several large hospitals and medical centers, which employ thousands of people. The pandemic has also highlighted the importance of the healthcare industry, with many hospitals and medical centers seeing increased demand for their services.”
We wish the health industry was as important for the Inland Empire as ChatGPT makes it sound. Government employs 7,200 more workers than the health industry, and even more if we exclude home care services from health care. More blatantly wrong is the claim that the health industry saw an increase in demand for their services during the pandemic. Instead, it suffered the second highest decline in employment (8% fall) during the early phases of COVID-19. Surprising? Yes, but people stayed away from medical facilities unless it was an emergency. Remember the number of dentist visits you made in 2020?
Verdict: We wish it were true, but this is entirely wrong.
“Manufacturing is another important industry in the Inland Empire. The region has a long history of manufacturing, with industries such as aerospace, automotive, and electronics playing a significant role in the local economy. The pandemic has had a significant impact on the manufacturing industry, with many businesses struggling to find workers and dealing with supply chain disruptions. However, the industry has shown resilience, with many businesses adapting to the new economic environment.”
Doubling down on manufacturing, huh? Maybe if President Joe Biden’s reshoring plan works. As we said earlier, manufacturing generates less than .7% of private sector employment in the Inland Empire. As for the aerospace, automotive, and electronics firms that play a “significant” role — we’re going to need to see some receipts, ChatGPT.
Verdict: Totally wrong, and wipes out some benefit of the doubt we gave earlier.
“In conclusion, the Inland Empire is facing significant economic challenges in 2023, including a tight labor market and housing affordability issues. However, the region has a diverse economy, with significant contributions from industries such as logistics, healthcare, and manufacturing. These industries have shown resilience in the face of the pandemic, and are likely to continue to drive economic growth in the Inland Empire in the years to come.”
Most of what ChatGPT told us was trivial or false — wrong numbers, wrong interpretations, wrong industries (again, manufacturing?). At this point, it seems ChatGPT is perhaps helpful for phrasing but still messes up factual statements.
We hope that no one would pay for what the AI did get right, because important themes went totally omitted. Why not talk about the reason for 35% of the Inland Empire’s labor force commuting, or why we have the economic well-being (per capita GDP) of Waco, Texas. For now, it seems that ChatGPT could potentially be a helpful tool, but economists’ jobs require genuine creativity and they seem safe from artificial intelligence for now.
Final verdict: Failing grade. Time for GPT-4.
Manfred Keil is chief Economist, Inland Empire Economic Partnership, associate director, Lowe Institute of Political Economy, Robert Day School of Economics and Finance, Claremont McKenna College.
Sasha Rothstein is Harvey Mudd College, Senior Research Analyst, Lowe Institute of Political Economy.
The Inland Empire Economic Partnership’s mission is to help create a regional voice for business and quality of life in Riverside and San Bernardino counties. Its membership includes organizations in the private and public sector.
