Department of Economics Working Papers,
Vienna University of Economics and Business, Department of Economics

Abstract: Recent advances in artificial intelligence (AI) have led to a diverse set of predictions about its long-term impact on humanity. A central Focus is the potential emergence of transformative AI (TAI), eventually capable of outperforming humans in all economically valuable tasks and fully automating labor. Discussed scenarios range from human extinction after a misaligned TAI takes over ("AI doom") to unprecedented economic growth and abundance ("post-scarcity"). However, the probabilities and implications of these scenarios remain highly uncertain. Here, we organize the various scenarios and evaluate their associated existential risks and economic outcomes in terms of aggregate welfare. Our analysis shows that even low-probability catastrophic outcomes justify large investments in AI safety and alignment research. We find that the optimizing representative individual would rationally allocate substantial resources to mitigate extinction risk; in some cases, she would prefer not to develop TAI at all. This result highlights that current global efforts in AI safety and alignment research are vastly insufficient relative to the scale and urgency of existential risks posed by TAI. Our findings therefore underscore the need for stronger safeguards to balance the potential economic benefits of TAI with the prevention of irreversible harm. Addressing these risks is crucial for steering technological progress toward sustainable human prosperity.

Keywords: Transformative Artificial Intelligence (TAI), Economic Growth, Technological Singularity, Growth Explosion, AI Takeover, AI Alignment, AI Doom

JEL-codes: I30; O11; O33; Q01 April 2025

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