Federal Reserve Bank of San Francisco

Benjamin F. Jones | AI in Research & Development

Professor Benjamin F. Jones, a Kellogg entrepreneurship scholar, explained how artificial intelligence is reshaping research and development. He framed the discussion with a historical view of income and longevity gains, arguing that new ideas—not merely more of the same—drive long‑run prosperity. Jones illustrated human creativity as a hallway of doors, emphasizing the “burden of knowledge” that forces researchers to stay near their expertise. Empirical evidence from the “pivot penalty” study shows that venturing into unfamiliar domains yields lower impact, and the penalty has steepened over decades. He contrasted this with AI’s combinatorial search, which can scan vast ingredient spaces and propose novel combinations far beyond a single expert’s reach. Quotes from Einstein and the hallway metaphor highlighted AI’s potential to act as a universal research assistant. If AI can reliably accelerate the ideas‑production function, R&D productivity could rise, feeding higher output per worker and faster economic growth. Policymakers and central banks therefore need to track AI‑driven innovation pipelines and consider regulatory frameworks that balance benefits with risks.