Research / BFI Working PaperFeb 05, 2024

The Unreasonable Effectiveness of Algorithms

Jens Ludwig, Sendhil Mullainathan, Ashesh Rambachan

We calculate the social return on algorithmic interventions (specifically their Marginal Value of Public Funds) across multiple domains of interest to economists—regulation, criminal justice, medicine, and education. Though these algorithms are different, the results are similar and striking. Each one has an MVPF of infinity: not only does it produce large benefits, it provides a “free lunch.” We do not take these numbers to mean these interventions ought to be necessarily scaled, but rather that much more R&D should be devoted to developing and carefully evaluating algorithmic solutions to policy problems.

More Research From These Scholars

BFI Working Paper Jul 27, 2021

A Note on the Level of Customer Support by State Governments: A Mystery-Shopping Approach

Oeindrila Dube, Sendhil Mullainathan, Devin Pope
Topics:  Economic Mobility & Poverty
BFI Working Paper Sep 20, 2021

Fragile Algorithms and Fallible Decision-Makers: Lessons from the Justice System

Jens Ludwig, Sendhil Mullainathan
Topics:  Technology & Innovation
BFI Working Paper Mar 21, 2022

Policing and Management

Max Kapustin, Terrence Neumann, Jens Ludwig
Topics:  Uncategorized