Artificial Intelligence (AI) is transforming industries, sparking both excitement and anxiety. Among the most common concerns is the fear that AI will lead to widespread job losses as machines take over tasks traditionally performed by humans. However, history and economics suggest a more nuanced story. A concept called Jevons’ Paradox provides an unexpected perspective on how automation may create more jobs than it replaces.
As a technical leader in AI and data analytics for the banking and insurance industries, I’ve witnessed firsthand how automation reshapes — not eliminates — the workforce. In this article, I’ll explore Jevons’ Paradox, provide examples of roles likely to disappear and those that AI is creating, and compare this AI era to the early days of the internet to illuminate what lies ahead.
What is Jevons’ Paradox?
Jevons’ Paradox, introduced by economist William Stanley Jevons, states that as a resource becomes more efficient and accessible, its overall use often increases rather than decreases. Historically, Jevons observed this with coal: more efficient steam engines made coal cheaper per unit of work, leading to higher overall consumption as industries expanded their use.
Now, replace “coal” with “AI.” As AI becomes more powerful, accessible, and affordable, it doesn’t just replace tasks — it opens new doors, creating demand for applications and roles that didn’t exist before. Instead of reducing the need for workers, AI is transforming industries and economies, expanding what’s possible and creating new opportunities.
AI in Banking and Insurance: A Case Study in Jevons’ Paradox
In banking, AI started with automating repetitive tasks like fraud detection and credit scoring. Over time, its capabilities unlocked new possibilities, such as:
- Customer Sentiment Analysis: Mining unstructured data to predict customer satisfaction.
- Personalized Financial Products: Designing tailored solutions for individual clients.
- Predictive Risk Models: Providing more accurate market forecasts.
Similarly, in insurance, AI began with claims automation and document digitization. It has since evolved into:
- Dynamic Pricing Models: Adjusting premiums in real-time based on data trends.
- Life Insurance Underwriting: Analyzing genetic and health data for personalized policies.
- Health Risk Assessment: Using wearable devices and AI to monitor and predict individual health trends, enabling proactive care and tailored insurance plans.
Each advancement required new skills, creating demand for roles like AI trainers, ethics specialists, and engineers capable of working with unstructured data.
Jobs Likely to Be Replaced by AI
AI excels at repetitive, rules-based tasks that require minimal creativity or human judgment. Roles most likely to be reduced or transformed include:
- Data Entry Clerks: Automated tools can handle large volumes of data.
- Telemarketers: Conversational AI systems manage customer outreach more efficiently.
- Basic Customer Support Agents: AI chatbots resolve routine queries without human intervention.
- Tellers and Cashiers: Mobile banking and self-checkout systems reduce demand.
- Claims Processors: AI expedites claims and fraud detection processes.
New Roles AI is Creating
AI doesn’t just replace jobs; it creates new ones that demand human ingenuity and oversight. Emerging roles include:
- AI Trainers and Prompt Engineers: Refining AI models for specific tasks.
- AI Ethicists and Auditors: Addressing ethical, legal, and compliance concerns.
- Data Annotators: Preparing high-quality labeled data for AI systems.
- Human-Machine Interaction Designers: Building intuitive interfaces for AI tools.
- Digital Twins Engineers: Creating AI-powered virtual replicas of physical systems.
- AI Policy Advisors: Helping organizations navigate regulations and ethics.
How This Era Compares to the Early Internet
The current AI era mirrors the early days of the internet:
- Early Internet Era (1990s-2000s): The internet disrupted industries like retail and media, sparking fears of job loss. Over time, it created new industries such as e-commerce, digital marketing, and app development.
- AI Era (2010s-Present): AI faces similar skepticism but is already creating roles like AI ethicists, augmented professionals, and integration specialists.
Much like the internet revolution, AI is likely to create far more jobs than it displaces, albeit jobs that require new skills and adaptability.
Lessons for Leaders in AI and Technology
- Focus on the Bigger Picture: AI’s real value lies not just in efficiency but in unlocking new capabilities and markets.
- Invest in Reskilling: Equip employees with skills to thrive in an AI-driven landscape, such as data engineering, ethics, and human-centered design.
- Leverage AI Ecosystems: Collaborate across industries to expand AI’s potential applications.
- Learn from History: Just as the internet created new opportunities, AI will do the same — if we adapt and innovate.
Conclusion: Turning Fear Into Opportunity
Jevons’ Paradox teaches us that technological progress doesn’t just disrupt — it transforms. AI, like coal and electricity before it, is a resource whose increased availability will expand the economy, unlock new possibilities, and ultimately create more jobs than it replaces.
As AI becomes cheaper and more accessible, the question isn’t whether it will change jobs — it’s how we can shape its impact to maximize opportunity and innovation.
What are your thoughts? Have you seen examples of AI creating new roles or industries in your field? Let’s discuss!
If you would like to connect with me to have in dept conversation about this topic please get in touch here or via Linkedin.
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