AGI and the EMH
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Section VIII

Markets are decisively rejecting the shortest possible timelines

While it is not possible to back out exact numbers for the market’s implicit forecast for AI timelines, it is reasonable to say that the market is decisively rejecting – i.e., putting very low probability on – the development of transformative AI in the very near term, say within the next ten years.

Consider the following examples of extremely short timelines:

  1. Five year timelines: With a 50% probability of transformative AI by 2027, and the same yearly probability thereafter, the model predicts 13.0pp higher 30-year real rates today!
  2. Ten year timelines: With a 50% probability of transformative AI by 2032, and the same yearly probability thereafter, the model predicts 6.5pp higher 30-year real rates today.

Real rate movements of these magnitudes are wildly counterfactual. As previously noted, real rates in the data used above have never gone above even 5%.

Stagnation. As a robustness check, in the configurable spreadsheet we allow you to place some yearly probability on the economy stagnating and growing at 0% per year from thereon. Even with a 20% chance of stagnation by 2053 (higher than realistic), under Cotra timelines, the model generates a 2.1% increase in 30-year rates.

Recent market movements. Real rates have increased around two percentage points since the start of 2022, with the 30-year real rate moving from -0.4% to 1.6%, approximately the pre-covid level. This is a large enough move to merit discussion. While this rise in long-term real rates could reflect changing market expectations for timelines, it seems much more plausible that high inflation, the Russia-Ukraine war, and monetary policy tightening have together worked to drive up short-term real rates and the risk premium on long-term real rates.