Large Language Models: An Applied Econometric Framework

The unintended consequences of large language models as a labor-augmenting technology in science

As a labor-augmenting technology, large language models (LLMs) have the potential to accelerate scientific activity across the research pipeline. But even if LLMs perform on par with human experts at selected tasks, their use will bring unintended consequences as they alter the balance of frictions and inducements that steer the allocation of research effort across projects. Here we develop a simple mathematical model to illustrate. In fields where LLMs are useful primarily as tools for discovering promising projects, researchers will become more selective about what they publish; where they facilitate the process of publishing existing data, researchers will become less selective. By allowing scientists to work more quickly, LLMs raise the opportunity cost of researcher time, creating incentives to refine papers less thoroughly before moving on. Enticing as it is to imagine that, by saving us time on mundane tasks, LLMs will provide us with more time to think deeply and develop projects completely, our results temper such hopes.

The unintended consequences of large language models as a labor-augmenting technology in science

As a labor-augmenting technology, large language models (LLMs) have the potential to accelerate scientific activity across the research pipeline. But even if LLMs perform on par with human experts at selected tasks, their use will bring unintended consequences as they alter the balance of frictions and inducements that steer the allocation of research effort across projects. Here we develop a simple mathematical model to illustrate. In fields where LLMs are useful primarily as tools for discovering promising projects, researchers will become more selective about what they publish; where they facilitate the process of publishing existing data, researchers will become less selective. By allowing scientists to work more quickly, LLMs raise the opportunity cost of researcher time, creating incentives to refine papers less thoroughly before moving on. Enticing as it is to imagine that, by saving us time on mundane tasks, LLMs will provide us with more time to think deeply and develop projects completely, our results temper such hopes.

Beyond Model Collapse: Scaling Up with Synthesized Data Requires Verification

Large Language Models (LLM) are increasingly trained on data generated by other LLM, either because generated text and images become part of the pre-training corpus, or because synthetized data is used as a replacement for expensive human-annotation. This raises concerns about \emph{model collapse}, a drop in model performance when their training sets include generated data. Considering that it is easier for both humans and machines to tell between good and bad examples than to generate high-quality samples, we investigate the use of verification on synthesized data to prevent model collapse. We provide a theoretical characterization using Gaussian mixtures, linear classifiers, and linear verifiers to derive conditions with measurable proxies to assess whether the verifier can effectively select synthesized data that leads to optimal performance. We experiment with two practical tasks -- computing matrix eigenvalues with transformers and news summarization with LLMs -- which both exhibit model collapse when trained on generated data, and show that verifiers, even imperfect ones, can indeed be harnessed to prevent model collapse and that our proposed proxy measure strongly correlates with performance.

Unlearning Traces the Influential Training Data of Language Models

Identifying the training datasets that influence a language model's outputs is essential for minimizing the generation of harmful content and enhancing its performance. Ideally, we can measure the influence of each dataset by removing it from training; however, it is prohibitively expensive to retrain a model multiple times. This paper presents UnTrac: unlearning traces the influence of a training dataset on the model's performance. UnTrac is extremely simple; each training dataset is unlearned by gradient ascent, and we evaluate how much the model's predictions change after unlearning. Furthermore, we propose a more scalable approach, UnTrac-Inv, which unlearns a test dataset and evaluates the unlearned model on training datasets. UnTrac-Inv resembles UnTrac, while being efficient for massive training datasets. In the experiments, we examine if our methods can assess the influence of pretraining datasets on generating toxic, biased, and untruthful content. Our methods estimate their influence much more accurately than existing methods while requiring neither excessive memory space nor multiple checkpoints.

Do Large Language Models Perform the Way People Expect? Measuring the Human Generalization Function

What makes large language models (LLMs) impressive is also what makes them hard to evaluate: their diversity of uses. To evaluate these models, we must understand the purposes they will be used for. We consider a setting where these deployment decisions are made by people, and in particular, people's beliefs about where an LLM will perform well. We model such beliefs as the consequence of a human generalization function: having seen what an LLM gets right or wrong, people generalize to where else it might succeed. We collect a dataset of 19K examples of how humans make generalizations across 79 tasks from the MMLU and BIG-Bench benchmarks. We show that the human generalization function can be predicted using NLP methods: people have consistent structured ways to generalize. We then evaluate LLM alignment with the human generalization function. Our results show that -- especially for cases where the cost of mistakes is high -- more capable models (e.g. GPT-4) can do worse on the instances people choose to use them for, exactly because they are not aligned with the human generalization function.

What and Whose Knowledge? Measuring Epistemic Diversity in Large Language Models

Large language models (LLMs) are increasingly used as primary knowledge sources, yet their epistemic diversity - defined as the diversity of real-world claims in their outputs - has never been measured. Low epistemic diversity would pose a risk of knowledge collapse as homogeneous LLMs mediate a shrinking in the range of accessible information over time. The dominant paradigm is that overall LLM diversity is low, but this is always with respect to a single point in time, with no reference baseline or consideration for variation across countries. We address this gap in knowledge by performing the first systematic study of epistemic diversity in LLMs across time and cultural context, testing 27 LLMs on 155 topics covering 12 countries, resulting in 1.7M responses and 70M individual claims. We find that epistemic diversity has increased substantially over the past three years, a positive counter to recent diversity pessimism. However, despite progress, we find that every system is less diverse than a search baseline. This gap is not uniform: RAG can improve diversity, while large models are counterintuitively less diverse than smaller ones. Moreover, LLM parametric knowledge systematically reflects English over local-language knowledge for country specific topics. Together, these results demonstrate that while progress on epistemic diversity is tangible, it is insufficient and unevenly distributed.

Scientific production in the era of Large Language Models

Large Language Models (LLMs) are rapidly reshaping scientific research. We analyze these changes in multiple, large-scale datasets with 2.1M preprints, 28K peer review reports, and 246M online accesses to scientific documents. We find: 1) scientists adopting LLMs to draft manuscripts demonstrate a large increase in paper production, ranging from 23.7-89.3% depending on scientific field and author background, 2) LLM use has reversed the relationship between writing complexity and paper quality, leading to an influx of manuscripts that are linguistically complex but substantively underwhelming, and 3) LLM adopters access and cite more diverse prior work, including books and younger, less-cited documents. These findings highlight a stunning shift in scientific production that will likely require a change in how journals, funding agencies, and tenure committees evaluate scientific works.

EXPRESS: Evaluating Novel Unstructured Treatments with Generative AI: A Causal Prediction Framework

Modern marketing increasingly requires managers to deploy new content at scale, often with limited opportunity for prior testing. As a result, decisions about what to launch become strategic managerial choices under uncertainty rather than purely creative exercises. While generative AI makes the creation of new content fast and highly scalable, it simultaneously expands the set of options managers must evaluate, making reliable content selection increasingly difficult. We develop a framework for causal prediction that enables managers to evaluate and deploy novel marketing content generated by AI. The framework uses pretrained large language models to represent previously deployed content and learn how its features causally relate to outcomes. Using a rejection-sampling procedure, the framework screens new content proposed by generative AI to avoid extrapolation beyond what historical data can reliably support. In a large-scale email marketing application (3.3 million observations across 34 campaigns), the framework improves out-of-sample prediction and real-world deployment performance relative to standard approaches, enabling outcome-guided generation of higher-performing AI-generated content. The framework establishes a threshold based on how closely new content resembles past campaigns, separating cases where causal prediction is reliable from cases where direct experimentation is warranted. The framework has important implications for marketing decision making in a rapidly evolving environment where generative AI is transforming content creation and deployment.

Augmenting Research Ideation with Data: An Empirical Investigation...

Recent advancements in large language models (LLMs) demonstrate strong potential for generating novel research ideas, yet such ideas often struggle with feasibility and effectiveness. In this...

Certainly! Generative AI and its Impact on Academic Writing (in Finance)

We examine how the public release of large language models (LLMs) has affected academic writing and publication outcomes in finance. Using a sample of 55,964 fu

LLM in a Flash: Efficient Large Language Model Inference with Limited Memory

Large language models (LLMs) are central to modern natural language processing, delivering exceptional performance in various tasks…

Training Compute-Optimal Large Language Models

We investigate the optimal model size and number of tokens for training a transformer language model under a given compute budget. We find that current large language models are significantly undertrained, a consequence of the recent focus on scaling language models whilst keeping the amount of training data constant. By training over 400 language models ranging from 70 million to over 16 billion parameters on 5 to 500 billion tokens, we find that for compute-optimal training, the model size and the number of training tokens should be scaled equally: for every doubling of model size the number of training tokens should also be doubled. We test this hypothesis by training a predicted compute-optimal model, Chinchilla, that uses the same compute budget as Gopher but with 70B parameters and 4$\times$ more more data. Chinchilla uniformly and significantly outperforms Gopher (280B), GPT-3 (175B), Jurassic-1 (178B), and Megatron-Turing NLG (530B) on a large range of downstream evaluation tasks. This also means that Chinchilla uses substantially less compute for fine-tuning and inference, greatly facilitating downstream usage. As a highlight, Chinchilla reaches a state-of-the-art average accuracy of 67.5% on the MMLU benchmark, greater than a 7% improvement over Gopher.

Language models struggle with compartmentalization

In the training data used by large language models (LLMs), the same latent concept is often presented in multiple distinct ways: the same facts appear in English and Swahili; many functions can be expressed in both Python and Haskell; we can express propositions in both formal and natural language. We show that LLMs can exhibit compartmentalization, where they fail to identify and share statistical strength between distinct presentations of unified concepts. In the worst case, LLMs simply learn parallel internal representations of each presentation of the concept, saturating model capacity with redundancies and decreasing sample efficiency with the number of such presentations. We also demonstrate that synthetic parallel data can fail to improve this despite being easily learned itself. Under this framework, we find that, for small models, early multilingual learning is nearly entirely compartmentalized. Finally, all interventions that we study exhibit a phase transition in which their effectiveness depends on the number of distinct presentations, suggesting that the language modeling objective may only inconsistently unify representations.

The diffusion of large language models in published academic articles

Large language models (LLMs) are rapidly changing academic research, raising questions of who is adopting these tools and under what conditions. This article analyzes full texts of 7.3 million journal articles published from 2020–2025 by four major publishers (Elsevier, Frontiers, MDPI, and PLoS) to track the prevalence of LLM-associated language and identify social and institutional correlates of adoption. A corpus of 228 focal words exhibiting sharp post-2022 frequency increases consistent with LLM output was developed; articles were scored on their rate of focal word usage. By 2025, an estimated 57% of published articles exhibited evidence of LLM influence, up from 12% in 2023. Among articles exhibiting LLM-influenced text, there is substantial heterogeneity, ranging from subtle linguistic influence to articles mostly or entirely LLM-generated. Difference-in-differences models reveal that LLM-associated language varies markedly across regions, institutional ranks, publishers, disciplines, and journal tiers. Economic development and proximity to English as a primary language are key predictors of regional variation. Lower-ranked institutions exhibit higher rates than elite universities, young for-profit publishers show elevated rates vis-à-vis competitors, and academic fields differ widely in adoption. LLM adoption in academic writing is pervasive but socially stratified. As models grow more powerful and their use becomes further entrenched in academic research, understanding social dynamics of adoption will be essential for governing the evolving relationship between AI and academic knowledge production.

Language Models Don't Always Say What They Think: Unfaithful Explanations in Chain-of-Thought Prompting

Large Language Models (LLMs) can achieve strong performance on many tasks by producing step-by-step reasoning before giving a final output, often referred to as chain-of-thought reasoning (CoT). It is tempting to interpret these CoT explanations as the LLM's process for solving a task. This level of transparency into LLMs' predictions would yield significant safety benefits. However, we find that CoT explanations can systematically misrepresent the true reason for a model's prediction. We demonstrate that CoT explanations can be heavily influenced by adding biasing features to model inputs--e.g., by reordering the multiple-choice options in a few-shot prompt to make the answer always "(A)"--which models systematically fail to mention in their explanations. When we bias models toward incorrect answers, they frequently generate CoT explanations rationalizing those answers. This causes accuracy to drop by as much as 36% on a suite of 13 tasks from BIG-Bench Hard, when testing with GPT-3.5 from OpenAI and Claude 1.0 from Anthropic. On a social-bias task, model explanations justify giving answers in line with stereotypes without mentioning the influence of these social biases. Our findings indicate that CoT explanations can be plausible yet misleading, which risks increasing our trust in LLMs without guaranteeing their safety. Building more transparent and explainable systems will require either improving CoT faithfulness through targeted efforts or abandoning CoT in favor of alternative methods.

Language Models Don't Always Say What They Think: Unfaithful Explanations in Chain-of-Thought Prompting

Large Language Models (LLMs) can achieve strong performance on many tasks by producing step-by-step reasoning before giving a final output, often referred to as chain-of-thought reasoning (CoT). It is tempting to interpret these CoT explanations as the LLM's process for solving a task. This level of transparency into LLMs' predictions would yield significant safety benefits. However, we find that CoT explanations can systematically misrepresent the true reason for a model's prediction. We demonstrate that CoT explanations can be heavily influenced by adding biasing features to model inputs--e.g., by reordering the multiple-choice options in a few-shot prompt to make the answer always "(A)"--which models systematically fail to mention in their explanations. When we bias models toward incorrect answers, they frequently generate CoT explanations rationalizing those answers. This causes accuracy to drop by as much as 36% on a suite of 13 tasks from BIG-Bench Hard, when testing with GPT-3.5 from OpenAI and Claude 1.0 from Anthropic. On a social-bias task, model explanations justify giving answers in line with stereotypes without mentioning the influence of these social biases. Our findings indicate that CoT explanations can be plausible yet misleading, which risks increasing our trust in LLMs without guaranteeing their safety. Building more transparent and explainable systems will require either improving CoT faithfulness through targeted efforts or abandoning CoT in favor of alternative methods.