The Economics of Human Oversight: How Norms and Incentives Affect Costs and Performance of AI Workers

The global surge in AI applications is transforming industries, leading to displacement and complementation of existing jobs, while also giving rise to new employment opportunities. Human oversight of AI is an emerging task in which human workers interact with an AI model to improve its performance, safety, and compliance with normative principles. Data annotation, encompassing the labelling of images or annotating of texts, serves as a critical human oversight process, as the quality of a dataset directly influences the quality of AI models trained on it. Therefore, the efficiency of human oversight work stands as an important competitive advantage for AI developers. This paper delves into the foundational economics of human oversight, with a specific focus on the impact of norm design and monetary incentives on data quality and costs. An experimental study involving 307 data annotators examines six groups with varying task instructions (norms) and monetary incentives. Results reveal that annotators provided with clear rules exhibit higher accuracy rates, outperforming those with vague standards by 14%. Similarly, annotators receiving an additional monetary incentive perform significantly better, with the highest accuracy rate recorded in the group working with both clear rules and incentives (87.5% accuracy). However, both groups require more time to complete tasks, with a 31% increase in average task completion time compared to those working with standards and no incentives. These empirical findings underscore the trade-off between data quality and efficiency in data curation, shedding light on the nuanced impact of norm design and incentives on the economics of AI development. The paper contributes experimental insights to discussions on the economical, ethical, and legal considerations of AI technologies.