This article investigates the econometric relationship between artificial intelligence (AI) adoption and wage premiums in knowledge-intensive occupations, addressing a critical gap in contemporary labor market analysis. Using a panel dataset of 3,247 firms across consulting, software development, and professional services between 2022 and 2026, we isolate productivity uplift from AI tool integr...
Category: AI Economics
AI Economics: Risk, Cost, and ROI Research by Oleh Ivchenko
Cash Flow Anomaly Detection: AI Models for Identifying Undeclared Income in SME Tax Returns
Unreported income among small and medium enterprises (SMEs) remains a critical challenge for tax authorities globally, with recent studies indicating that undeclared income accounts for 15-25% of the tax gap in European OECD nations. This article addresses the gap in current tax compliance tools by developing and evaluating machine l[REDACTED]g models specifically designed to detect anomalous c...
Total Cost of Ownership for Enterprise LLMs: A 2025 Framework Beyond GPU Cost
Enterprise adoption of large language models (LLMs) has progressed from experimental pilots to core production workloads, yet most organizations continue to compute return on investment (ROI) using GPU‐hour pricing as the sole cost driver. This narrow view systematically underestimates the true economic burden of LLMs, omitting fine‑tuning expenses, retrieval‑augmented generation (RAG) infrastr...
AI-Driven Tax Compliance: How Explainable AI Transforms Shadow Economy Detection
Shadow economies impose massive revenue losses on governments worldwide, yet detecting illicit financial activity remains a persistent challenge. Traditional statistical and rule‑based methods often lack the interpretability needed for regulators to trust automated alerts. Recent advances in Explainable Artificial Intelligence (XAI) offer a pathway to illuminate decision‑making processes, enabl...
The EU AI Act Explanability Requirements: Technical Specification Analysis
The rapid deployment of artificial intelligence systems across high‑risk domains has prompted regulators to demand greater transparency and accountability. The European Union’s Artificial Intelligence Act (EU AI Act) introduces a comprehensive framework for trustworthy AI, with particular emphasis on explicability obligations for high‑risk AI systems. This article dissects the technical specifi...
XAI Tool Economics: The Cost Structure of Explanation Generation
Explainable Artificial Intelligence (XAI) tools are increasingly deployed to provide transparency in machine l[REDACTED]g models, yet their economic viability remains poorly understood. This article analyzes the compute and engineering costs associated with generating explanations at scale across three prominent XAI methodologies: feature attribution, counterfactual generation, and prototype-ba...
Transparent AI Sourcing: Build vs Buy Economics When Explanations Matter
Enterprise AI procurement faces a critical dilemma: build custom solutions for tailored explainability or buy off-the-shelf platforms with faster deployment but limited transparency. This article analyzes the economic trade-offs in AI sourcing decisions when explainability requirements are paramount, drawing on the IEEE 3119-2025 standard for AI procurement and recent empirical studies. Our ana...
AI Task Taxonomy by Complexity: A Cost Analysis Across Model Architectures (March 2026)
Effective enterprise AI deployment requires matching task complexity to model capability — not defaulting to the most capable model for every workload. This meta-analysis introduces a six-tier task complexity taxonomy calibrated to March 2026 API pricing across nineteen models from six major providers. We demonstrate that systematic model-task alignment reduces per-task costs by 60–95% compared...
Same Pill, 171x the Price: Interstate Drug Pricing Variance in U.S. Medicaid Data
Between 2018 and 2024, U.S. Medicaid prescription drug spending grew from $16.1 billion to $27.6 billion — a 71% increase in six years, driven by a handful of high-price biologics, a brand-generic cost gap of over 3,000x per unit, and interstate price variations so extreme they defy any market-rational explanation. This paper presents a data-driven analysis of 13 visualizations derived from pub...
Knowledge Collapse Economics: The Hidden Cost of Outsourcing Cognition to AI
The dominant narrative around artificial intelligence economics focuses on productivity gains, labor displacement, and cost optimization. A less examined but potentially more consequential dimension is emerging: the erosion of collective human knowledge when AI substitutes for cognitive effort rather than augmenting it. This article analyzes the economic implications of knowledge collapse — a p...