AI could boost software engineer productivity by 32.6%

08/10 15:30 - AI could boost software engineer productivity by 32.6%
Tools such as Anthropic Claude Code or OpenAI Codex have changed the face of software development, and all the signs are that this investment is set to increase further. But is paying a monthly subscription (and perhaps additional usage fees) cost-effective? Will the increasing level of investment in AI-generated software prove to be worthwhile? That’s a question several economists from the US National Bureau of Economic Research have attempted to answser, at least indirectly. Their paper, snappily entitled The Macroeconomic Effect Of AI: Sizing The Software Engineering Channel, attempts to calculate how much AI has increased the productivity of software engineers in enterprises outside the software and semiconductor industries by looking at their share prices. “The main idea is that if AI raises the productivity of software engineers, then firms that rely more heavily on them should benefit more. Therefore news about AI generates higher expected profits for these firms. These profits are capitalized into larger stock price responses. Combining these stock price responses with a model, we can pin down the increase in software engineering productivity expected by financial markets,” the researchers wrote. And the answer? “From November 2022 to December 2025, AI increased the market’s expected present value of software engineering productivity by the equivalent of a permanent 32.6% productivity increase.” That’s not to say that your software engineers will be that much more productive, but it’s a starting point for allocating budget between AI tool use and payroll. This article first appeared on CIO. ...