The Measurement Revolution? Credible Measurement and Inference in the Age of AI
TL;DR
It is argued that credible inference with AI-generated variables requires appropriately designed validation: anchoring measurement to explicit criteria, rather than informal claims that a proxy is reasonable, and how validation samples support valid inference even when AI predictions are arbitrarily biased.
Abstract
Artificial intelligence (AI) is transforming measurement in economics. AI models convert unstructured data, such as text and images, into structured variables at low cost, making previously prohibitive measurement feasible at scale. This shifts the bottleneck from finding any scalable measure of a phenomenon to choosing among many plausible ones, which may support different empirical conclusions. This review provides guidance for navigating that shift. We describe three stages at which AI enters the measurement pipeline---discovery, construct definition, and observation---and what each demands of researchers. We argue that credible inference with AI-generated variables requires appropriately designed validation: anchoring measurement to explicit criteria, rather than informal claims that a proxy is reasonable. We then examine how validation samples support valid inference even when AI predictions are arbitrarily biased, and what can be done when a random validation sample is unavailable.