How worried are you about the risk of automation? Automation and generative AI might be coming for your job. Despite some good news, people seem more likely to take account of pessimistic views than more optimistic views (see here) about their future job prospects, contributing to their worries.
Given the perceived risk of automation, would workers be willing to forego some of their income in exchange for greater job security? That is the question answered in this new article by Maria Cattaneo (Swiss Coordination Centre for Research in Education), Christian Gschwendt, and Stefan Wolter (both University of Bern), published in the Journal of Economic Behavior and Organization (open access). They conducted a discrete choice experiment (DCE), where research participants were asked to repeatedly choose between different options for a future 'hypothetical' child. Each option had different characteristics, two of which were the income and the risk of automation, with the latter specified as:
...“the probability that the job could be completely replaced by digital technologies such as robots or artificial intelligence within 10 years.”
The advantage of a DCE is it enables Cattaneo et al. to estimate the willingness to pay for lower risk of automation - a measure of how much income workers would be willing to forego for greater job security. Based on their representative survey of nearly 6000 Swiss adults, they find that:
...respondents would be indifferent between choosing a job with a given automation risk and a job with a 10 percentage points higher risk if the increase in yearly wages is CHF 15,333... Given that the median yearly income of an employee was around CHF 88,000 in 2022... this would mean that people are willing to pay around 17 % of the median yearly income for a 10 percentage point reduction in the automation risk...
That is a substantial willingness to pay (WTP) for lower risk from automation. In comparison:
The absolute and relative level of this value is also reflected, for example, in the fact that the WTP is more than ten times higher than respondents would be prepared to pay for a top management position compared to a low hierarchical position.
For some additional context, the baseline automation risk for 'Hospitality, Retail and Other Services Managers' is 10 percent, for 'Drivers and Mobile Plant Operators' is 40 percent, and for 'Business and Administration Professionals' is 100 percent. Sadly, Cattaneo et al. don't evaluate the willingness to pay based on different occupations - that might be a useful exercise for follow-up research, as the willingness to pay is unlikely to be linear in baseline risk. Indeed, they report that:
...the WTP to reduce job automation risk by 10 percentage points is 1.6 times higher when moving within the higher automation risk range than within the lower range. This suggests that individuals perceive greater benefits from mitigating higher baseline automation risks or, conversely, value risk reductions less at lower baseline risks.
It makes sense that those in jobs that are most at risk of automation should be differentially willing to pay to reduce that risk than those in jobs that are at lower risk. Looking at other characteristics of the sample, Cattaneo et al. find that:
Male respondents show a mean WTP that is CHF 686 lower than that of female respondents, which implies that a 10-percentage-point reduction in the automation risk is valued higher by women than men. Concerning age, people aged 50 and older need CHF 2102 more to counteract an increase in automation risk compared to people younger than 35.
In terms of the latter, Cattaneo et al. suggest that:
The reason behind this may be that older people have more labor market experience and have already lived through one or more technological and employment changes in labor market conditions, potentially including periods of unemployment. As a result, they may be better positioned to understand or predict changes in labor market dynamics, while younger respondents, who are more familiar with new technologies, feel more secure in coping with these changes.
I wonder whether older research participants might have children of their own, making questions about 'hypothetical' children more salient for them, because they are thinking about their real child, rather than a hypothetical child. That would likely make them more willing to pay to reduce automation risk.
Finally, Cattaneo et al. find that:
...respondents with tertiary education have a lower WTP for lower exposure to automation than those with a secondary or below secondary degree.
That result is surprising, given that future automation is more likely to affect better-educated workers than previous job changes due to automation. Perhaps the more educated workers are more likely to have used generative AI themselves, and see the potential benefits alongside the risks? Indeed, Cattaneo et al. suggest that more educated workers:
...may be more optimistic that advancing automation will generate new tasks and opportunities for which they feel well-prepared, given their skills and education, contributing to their lower WTP to reduce automation risk. Consistent with this, our survey data shows that the adoption of generative AI—a technology that automates a wide range of new work tasks—increases with education level, possibly indicating that higher-educated respondents are already finding ways to leverage this emerging technology to their advantage...
Overall, it is clear that there is a high degree of worry about automation risk among Swiss workers. Periods of change and uncertainty are particularly worrying, and we are certainly in such a period. Automation will lead to considerable changes in job tasks, while there remains a high degree of uncertainty about the contribution of generative AI in particular, and automation more generally, to future labour market outcomes. To reduce our worries, we need to keep in mind that past periods of substantial technological change and uncertainty in the labour market have actually led eventually to better outcomes overall.
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