What's the Price Elasticity of Demand for Intelligence?

cycogs for the masses

For this article, we’re going to need a unit of measurement that doesn’t exist yet, so let’s define it straight away:

1 cycog¹ is an equivalent of one hour of cognitive work by a 130 IQ human.

130 IQ is two standard deviations away from the mean, so one in 40 humans scores that high. That’s around the average IQ for doctors, lawyers, software engineers, etc.

Today, in the US, generally you can buy one cycog for somewhere in the $100-$1000 range. We’re going to be operating in orders of magnitude here, so narrowing it down is not very important.

The proven price floor for a cycog is around $0.001. That’s the cost of electricity consumption for a human brain. You can make arguments about depreciation - each hour of cognitive work relies on years of learning, but let’s ignore that for now. There’s no reason to assume that eventually we won’t have a cognitive architecture cheaper than human brains but by that time our world will have changed so much that even talking about units related to human work might not make sense, so let’s set the floor at $0.001.

GPT-4 is already pretty damn close to a 130 IQ human. It’s not quite there yet, but given the speed of improvement we’ve seen for the last few years, it’s reasonable to assume that we will hit that mark pretty quickly. The costs of running these models are also dropping extremely rapidly. And you can copy a model for free, so the depreciation math shakes out very differently than it does for humans. So it takes very little imagination to picture a world where the price of cycogs is dropping extremely rapidly. In this post, I will try to think through how many cycogs I would consume at different price levels. I will only talk through personal consumption, enterprises are a whole different story.

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$100-$1000 (today)

Today, I directly consume a couple of cycogs per month - doctors, lawyers, accountants, etc. There’s tons of indirect consumption - every tool that I use required cycogs to make but let’s focus on just direct consumption.

cycogs consumed = 2/month

monthly spend on intelligence = $600

$10

At every new price level, I would consume all the cycogs I consumed at the higher level, plus some more (assuming my income stays constant, which is a very bold assumption in this world, but let’s roll with it). At $10 per cycog, the main new spend for me would be hiring² a full-time research assistant for at least a couple of weeks per month (at $400/week it seems very reasonable). I don’t have time to read scientific papers all day every day anymore, and I’m rather sad about it. For example, recently, a new paper about consciousness and the claustrum came out - and I want to go through the paper itself and every single study it cites, but that would take a lot of time I don’t have. I could just tell my research assistant “Here’s what I believe, here are the shapes of arguments about consciousness I find stupid, go through every study this paper cites and provide a summary of how I should update my views”.

cycogs consumed = 83/month

monthly spend on intelligence = $830

$1

At $1 per cycog, things start to get interesting. $100 could buy you:

• an MVP of a custom phone app

• a REALLY good short story

• a design of an experiment

• an in-depth financial examination of a publicly-traded business

• an always-on coach who is with you most of the time

I would probably buy, on average, one of these (or products of similar difficulty) every month. This roughly equates to executing on a new random idea a little more frequently than once per week - that checks out to me.

cycogs consumed = 583/month
monthly spend on intelligence = $583

$0.1

At this point, $100 would buy you one kilocycog - an equivalent of roughly half a year of cognitive work. What can you do with one kilocycog?

• Run experiments equivalent to the amount that goes into a small scientific paper

• Write a short book

• Have a few doctors of different specialties monitoring all your vitals in real time

• Develop an indie video game

This is where we start to run into the territory where the limit becomes how much time I have to consume entertainment. I can’t imagine I’d have time to try more than one indie video game per month, maybe read a couple of books. But also, some of the books I read, I read for the cultural aspect - so they’d still be books that everyone else reads, so not all of them would be custom. I would want the doctor monitoring thing though. And I don’t have ideas for good experiments that often, so guessing I’d top out at 3-4 kilocycogs here.

cycogs consumed = 3583/month
monthly spend on intelligence = $358

$0.01

At one cent per cycog, we get into the custom software territory. $100 gets you a fully developed software product tailored to your exact specifications. At this point, I’d slowly start transitioning from using popular apps - Spotify, Google Docs, etc. to fully custom built software. I probably wouldn’t spend $5,000 in the first month to move over most of my apps, but as I get used to it (and learn my own preferences better), I will probably switch 1-2 apps per month. But also, this is the point where I occasionally begin to splurge on larger entertainment products. A fully custom anime series would cost around $2000 to make, I can see buying 2-3 of those per year. Another thing I do at this point is get something like a 5-person family office to manage my finances.

cycogs consumed = ~100,000/month

monthly spend on intelligence = $1000

$0.001

At the (currently proven limit), making something like your own operating system or your own AAA video game would cost you around $2000. I can’t imagine I’d need software of that magnitude often - but I’d get some every now and then. At this point, I’d probably get entire books written for larks - like a version of Lord of the Rings where the story is told entirely from Gandalf’s point of view, he views the whole ring thing as performance art, and he’s running a drug side hustle having eagles deliver his merchandise across the Middle Earth³. But this is where my imagination starts running into limits - realistically, commissioning work that takes million of hours to make is pretty tricky by itself.

cycogs consumed = ~700,000/month

monthly spend on intelligence = $700

The above numbers net out to a price elasticity of demand for intelligence of about -1. I expect that the general demand will be slightly less elastic than my own because most people are more memetic than me, so they will consume slightly less custom-made stuff.

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It’s interesting to me that throughout the process, my predicted spending on intelligence stays roughly within an order of magnitude. It’s also interesting to think about businesses - looking at my consumption patterns, at first knowledge work businesses will benefit from lower costs, but later on, as more and more people get more and more custom stuff done, most knowledge work businesses will just die.

This is obviously a hugely speculative post, so if you have thoughts about your own cycog consumption at different price levels - please share them! I’d love to hear how others think about this.

1. cycle of cognition

2. I will use the words hire/buy here interchangeably.

3. obviously elves get psychedelics, orcs get PCP, dwarves get amphetamines, Rohan has an opioid crisis, and hobbits just smoke weed, though they mostly grow it themselves