And you may wonder, what
does Artificial Intelligence have to do with this economics problem? Is a
computer going to pay my pension when I retire? Unfortunately, an application
is not going to pay and save for you any time soon, but there are start-ups who
think they can provide better retirements, change the whole pensions’ paradigm
and apply AI for designing pension schemes.
And how is artificial
intelligence approaching pensions?
Behavioural Finance is the biggest challenge financial
planners have to face, it is the irrational component that push us to take
decisions that are not logical or based on evidence. Only very experienced
financial planners are able to isolate behavioural biases out of their customers
and help them successfully. Obviously, those skilled advisors are not working
for public pension systems.
An Artificial Intelligence robot could sort this out. A
machine planned to identify irrational patterns on savings, can tell us in 2016
which consequences our actions will have
in 2046. This robot’s intelligence would learn case after case, isolating the
best saving schemes for every individual’s needs, and striking out our
irrational ideas, based not only on our words and thoughts, but on the constant
flow of behaviour that our digital data carries.
This whole new way of planning the future will have significant
changes in finance. Efficiency will be key in the system, and public pensionscould become obsolete because of their rigidity. The AI would tell us how much
we should save based on our life patterns, level of earnings, but also life
expectancy, our personal health habits, the size of our family, the kind of
trips we like taking, and so forth.
The main question now is; are our governments spotting this
opportunity and adapting to the new paradigm before the pay-as-you-go system
arrives to a violent end?.
