These days, especially in the world of AI, there’s a lot of debate about the value of a human, the idea being that if AI is more efficient than a human, why not just use AI?

Sure, that’s one way to look at it, but here’s another. It comes to us from the world of fund management (Vanguard, Fidelity, etc):

If you take a market index like the S&P 500, in any given year, after fees, approximately 75% of the active fund managers will underperform the index. And the ability of individuals to pick ahead of time which 25% are going to outperform, that’s pretty low, pretty bad.

What’s more, if you try to extend that pattern out for 10 years or even more, after fees, the chance of outperforming the averages becomes even worse.

And yet even 50 years after passive index funds were introduced to do away with this dynamic, people are still paying active managers.

One of the examples of how much they’re willing to pay is that if, at age 25, you invest $100,000, at retirement you are going to have $1.5 million if you do it without fees, but with fees you’re going to have $1 million. That’s a big chunk of money that people are giving to other people!

This is one of the best arguments in the world for the fact that humans are willing to pay other humans to underperform an automation. Humans sleep better at night knowing that another human is watching out for them.

So amidst all of this talk about how AI is going to replace people, and yes, there will be some aspects of their jobs which are automated away and taken over by AI, the irrational fear that AI is going to take your job is just that: Irrational. Humans are providing plenty of evidence to show that when push comes to shove, they like being inefficient if there’s a human in the loop.