This week, we’re joined by David Deming, top labor economist, blogger at the Forked Lightning Substack, and — since 2025 — Undergraduate Dean of Harvard College, to ask how the value of social skills will change in the age of thinking and talking machines. We start with his QJE paper “The Growing Importance of Social Skills in the Labor Market,” which models social skills as a factor that reduces coordination costs, plus his new work arguing that meetings must be important because Norwegian workers spend about 12% of their hours in them. We ask how the coming Coasean singularity — the ability of AIs to communicate and bargain on our behalf — will change all this; David thinks that making routine communication cheap just frees up more time to argue about the questions that have no right answer. We then turn to how this research informs his leadership at Harvard. Andrey asks about his research with Raj Chetty and John Friedman, which shows that an Ivy-Plus admission is a lottery ticket for joining the elites, and we talk about the cause of that finding, and how AI might change it. David argues that although social skills will be increasingly important, admissions shouldn’t select on them until we can measure them. We discuss possible new approaches to integrating AI into schools, including controlled first drafts, voluntary Yondr pouches, and oral exams. We close the discussion of Harvard with the faculty’s vote to cap A’s at 20% plus four.The lightning round covers how he would allocate his social skill RPG stats, why ChatGPT use turns out to be “broad but shallow,” what economists get wrong because they lack social skills, and a tribute to David’s advisor Larry Katz. Most interesting in Seth’s opinion was David’s decision to favor composure and charisma over manipulation in RPG stats; in the bulk of the interview, he seems to suggest that raw charisma is less important than the ability to coordinate and smooth over differences in a work context, which would be closer to manipulation. Perhaps downplaying the importance of some social skills is the most important social skill of all… Links Our guest * David Deming’s website and his Substack, Forked Lightning Social skills * Deming, “The Growing Importance of Social Skills in the Labor Market”, QJE (2017) — the paper we open with: social skills as reduced coordination costs in team production, tested in the NLSY and in occupational data, 1980–2012 * Becker & Murphy, “The Division of Labor, Coordination Costs, and Knowledge”, QJE (1992) — why the economy isn’t one big team * Deming, Løken, Willén & Xu, “Meetings”, NBER WP 35706 (2026) — the Norway paper: meetings take ~12% of work hours and ~14% of firm wage bills, and meeting intensity correlates with wage growth * Shahidi, Rusak, Manning, Fradkin & Horton, “The Coasean Singularity? Demand, Supply, and Market Design with AI Agents”, NBER WP 34468 — Andrey’s paper, which (note the question mark) does not predict that it will actually happenYudkowsky, “Coherent Extrapolated Volition” (2004) — the rationalist term Andrey reaches for * Deming, “Efficient social learning is the human advantage over AI” — the “last human skill” argument: sample-efficient humans hold a comparative advantage in sparse, high-context tasks, and nothing is higher-context than social life AI at Harvard (plus admissions and the Ivy-Plus premium) * Chetty, Deming & Friedman, “Diversifying Society’s Leaders? The Determinants and Causal Effects of Admission to Highly Selective Private Colleges” (NBER version) — waitlist design: attending an Ivy-Plus college rather than a flagship public raises the chance of reaching the top 1% by about 50% and nearly triples the chance of working at a prestigious firm. The paper also identifies athletic recruitment as one of three drivers of the high-income admissions advantage, relevant to my editorializing at 30:22. * Derek Thompson, “Why Harvard’s Dean ‘Encourages’ Students to Use AI” — David’s longer interview on the same themes * Yondr — the phone pouches David bought as a voluntary commitment device * Panos Ipeirotis, “Fighting Fire with Fire: Scalable Personalized Oral Exams with an ElevenLabs Voice AI Agent” — the NYU professor’s AI oral examiner Andrey mentions (36 oral exams for about $15 total) Grade inflation * “70% of Faculty Vote to Overhaul Harvard Grading With A Cap” — Crimson on the 458–201 vote capping A’s at 20% plus four, starting fall 2027 Lightning round * A note on my character sheet. Sharp-eyed Storytellers will notice that the social attributes I read out at 52:41 (Charisma, Manipulation, Composure) come from no published edition. Classic World of Darkness has Charisma / Manipulation / Appearance. The 2004 Storytelling System behind Chronicles of Darkness renamed Charisma to Presence and swapped Appearance for Composure. This was, of course, entirely intentional. I kept the new edition’s Power / Finesse / Resistance structure and restored the classic Charisma (Presence sounds like a meditation app). Call it a house rule. * Chatterji, Cunningham, Deming, Hitzig, Ong, Shan & Wadman, “How People Use ChatGPT”, NBER WP 34255 (2025) — the source of “broad but shallow” * Garicano, “Hierarchies and the Organization of Knowledge in Production”, JPE (2000) — the knowledge-hierarchy framework David thinks AI will reshape * Baker, Gibbons & Murphy, “Relational Contracts and the Theory of the Firm”, QJE (2002), and Gibbons & Henderson, “Relational Contracts and Organizational Capabilities”, Organization Science (2012) — “highly rated but still underrated” * Deming, “Early Childhood Intervention and Life-Cycle Skill Development: Evidence from Head Start”, AEJ: Applied (2009) — the Larry Katz labor-class paper that became David’s first publication Connections to previous Justified Posteriors episodes: * JP: Seb Krier on AGI, the Coasean Singularity, and EDM — the optimistic case for agent-mediated bargaining at scale * JP: Noah Smith on Blogging, AI Economics, and Elite Overproduction — Coasean utopia vs. the collapse of all meaning (answer: why not both?) * JP: Does AI Cheapen Talk? (Bo Cowgill Pt. 1) — makes the point that cheap communication so far means more bad communication, not more good * JP: Alex Imas — Demand Collapse, Bargaining with Machines, and Behavioral AI Economics and Imas, “What will be scarce?” — the demand-side “relational sector” argument David contrasts with his supply-side story * Hackenburg et al., “Scaling language model size yields diminishing returns for single-message political persuasion”, PNAS (2025) — the “AI persuasion maxes out” result I ask about, and our episode on it, Scaling Laws Meet Persuasion Chapters (01:25) Social skills: coordination costs, the Coasean singularity, and “the last human skill” (20:39) AI at Harvard, teaching and selecting for social skills and the Ivy-Plus lottery ticket (46:05) Fighting grade inflation (52:41) Lightning round: Social Skills as RPG stats, “How People Use ChatGPT,” whether economists need better social skills, and Larry Katz Transcript David: I’m making an argument this is like the last human skill. Andrey: So should Harvard just stop teaching hard skills and go all in on social skills? David: No. Andrey: Damn it. I thought I got you. [laughs] Seth: Nobody’s going to have to communicate anything. The AI will tell each other, and then the AI will just tell me what to do, and no one will ever have to go to a meeting. David: My guess is it will decrease the quantity of communication but increase the quality of it. AI will not have the meeting that tells you what the company’s strategic direction will be over the next two years, because there’s no right answer to that. Andrey: If we all do have a lot more free time, then the most important thing that we should be doing is arguing over what the big AI system should be doing for us. David: We spend a lot more time firing takes at each other and arguing about things, in part because most work is not necessary for human survival. Most of us are entertainers. It would seem crazy to our ancestors that we have podcasts. Seth: David, I could not disagree more. Welcome to “Justified Posteriors.” Today, we’re joined by David Deming, top labor economist and, since 2025, dean of Harvard College, to talk about social skills in the age of AI and how Harvard is changing to meet the challenge. I’m Seth Benzell, always putting my social skills to the test here at Chapman University in sunny Southern California. Andrey: I’m Andrey Fradkin, coming to you from San Francisco, California, and we’re very excited to have you on the show, David. David: Thanks for having me, guys. I’m looking forward to it. (01:25) Social skills: coordination costs, the Coasean singularity, and “the last human skill” Seth: All right, so I guess the first thing we really want to talk to you about is you have so much really interesting, influential work about how social skills work in the labor market. And so we want to dive into how you think that that’s going to change in the age of AI, how Harvard can be part of that, maybe teach those social skills or select for them. But maybe a good place to start is you have this very influential paper, “The Growing Importance of Social Skills in the Labor Market.” Tell me what that found about change in demand for social skills from the 1980s to 2012. David: Yeah, sure. So as you mentioned, the paper is called “The Growing Importance of Social Skills in the Labor Market,” and it’s really two things. The paper is an economic model of why social skills would actually be valuable in production and not just like, “Oh, I’m good at cocktail party conversation or I’m good at building social networks.” [laughs] It would actually be productive in
