The Rise of the Experience Economy: Why AI Will Make Being Human the Ultimate Luxury

The definition of luxury is never static; it is determined entirely by scarcity.

For an economist, the history of human progress is really a history of value shifting from one resource to another. When a resource becomes abundant, its market price drops, and value flows toward whatever has become rare. We are currently standing on the edge of the biggest value shift since the Industrial Revolution. As Artificial Intelligence begins to automate the service sector, it is creating an abundance of competence. But in doing so, it is creating a new, profound scarcity: real human connection.

The Perception of Value: A Historical Shift

To understand this upcoming shift, we must look at how technology has historically collapsed the perceived value of luxury goods.

Value is rarely intrinsic; it is almost always perceived based on availability. Consider the history of aluminum. In the mid-19th century, refining aluminum was so difficult that it was more valuable than gold. Napoleon III famously served his most honored guests on aluminum plates, while the lesser nobility ate off gold. Yet, once the Hall-Héroult process made extraction easy in 1886, aluminum became a commodity used for disposable cans. The utility of the metal did not change; its abundance destroyed its luxury status.

We saw a similar trajectory in the silk industry. For centuries, silk was the fabric of emperors, protected by trade barriers and the difficulty of sericulture. But as industrial looms mechanized weaving and the opening of the Suez Canal flooded markets with cheaper Asian silk—followed later by synthetic competitors like Rayon—the price collapsed. Silk moved from a symbol of god-like status to an accessible good.

In every instance, when technology makes something easy to produce and widely available, the market stops rewarding the function and starts paying for whatever remains rare.

The Progression of Economic Value

Today, we are climbing this ladder again. In 1998, economists B. Joseph Pine II and James H. Gilmore published Welcome to the Experience Economy. They argued that economic history is a distinct march through stages, where each new stage commoditizes the one before it:

• The Agrarian Economy: We extracted raw materials. Value was in the harvest.
• The Industrial Economy: We processed materials into goods. Value shifted to the manufacturer.
• The Service Economy: We started buying activities—someone else brewing the coffee or managing the portfolio. Value shifted to the provider.

For the last forty years, developed nations have lived comfortably in that third stage. Services account for the vast majority of our GDP. But the AI revolution is about to do to services what the industrial loom did to silk weaving: industrialize them.

The Industrialization of Cognition

AI is essentially a machine for cognitive labor. Writing, planning, coding, customer support, and strategy are being compressed into automated workflows. As the models improve and the interfaces disappear into everyday products, "intelligent service" becomes cheap, instant, and ubiquitous.

Pine and Gilmore predicted that when services become commoditized—meaning fast, interchangeable, and price-competitive—economic value must migrate upward into a fourth stage: The Experience Economy. In this economy, you do not charge for the coffee (the good) or the brewing (the service). You charge for the feeling of being there. You charge for attention, atmosphere, story, and belonging.

The New Luxury

As the digital world becomes flooded with perfect, synthetic interactions, the market pivots toward what cannot be scaled. We see this clearly in how we spend our leisure time.

Travelers are increasingly rejecting the generic for the immersive. Platforms like Airbnb are explicitly shifting their philosophy from "renting a house" (a service) toward "selling an experience." In May 2024, they announced Airbnb Icons, a new category designed to let guests step into worlds that previously only existed in imagination.

But the trend goes beyond big brands. We see it in the explosion of hyper-specific stays: train-themed residences that evoke a slower era, deep-woods cottages that promise total isolation, and narrative-driven retreats. People are no longer paying for a roof over their heads; they are paying for an escapist experience to break the monotony of the digital world.

Premium Friction

The strangest twist of the AI era is that convenience stops being impressive. When everything becomes fast, smooth, and on-demand, the experiences that feel most valuable start to look almost old-fashioned. They have edges. They have limits. They require intention.

People will pay for the kinds of constraints we used to complain about: a small room, a short guest list, a fixed start time, a phone left at the door. Not because scarcity is cute, but because it protects the mood. It keeps the moment from being flattened into content.

This is Premium Friction. It is not discomfort for its own sake; it is design that preserves presence. If there are only twelve seats, if the pace is slow, if nobody is recording, then what happens in the room has weight. It cannot be replicated at scale, and that is precisely the point.

The Scarcity of Presence

But the deeper shift is not just where we travel or how we unwind. It is how we relate.

We have more interaction than any generation in history, and less of what interaction is supposed to deliver. As noted in the U.S. Surgeon General's Advisory on Loneliness, our digital saturation is correlating with a decline in genuine social health. Social media fatigue is not just boredom; it is the feeling of being surrounded and still alone.

Now add AI. As synthetic companions and customer-service agents learn to sound patient, funny, and emotionally fluent, the world fills with conversations that technically work but do not land. The result is a strange hunger for something simple: a real person who is actually there.

In that world, human contact stops being the default and starts becoming the upgrade.

Think about the last time you tried to reach an actual human at a major company. You probably bounced between menus, forms, and chat windows designed to keep you moving. Soon, the ability to speak to a real person—someone who pauses, listens, and catches nuance—will feel like a privilege. It will be marketed that way, too.

The Return of Patronage

The "artisans" of this new economy will not just be craftspeople. They will be the community builders, the hosts, the guides, the teachers, and the caretakers. In a world where functional output is abundant, the scarce skill is the ability to create emotional reality: trust, safety, warmth, and shared meaning.

This is why a patronage model returns. Individuals and organizations will increasingly fund the people who can convene others, hold space, and reliably generate belonging. Just as the Industrial Revolution turned the hand-weaver into a high-value artist, the AI revolution will elevate the good listener, the empathetic host, and the community leader into some of the most valuable people in the room.

A Bifurcated Economy

Services shaped the economic reality of the last thirty years. Industry shaped the era before that. AI will undoubtedly shape our future, but a significant part of this shift will extend beyond the tech.

As we automate the functional parts of our lives, we will demand the luxury of the emotional. The economy is returning to its roots, but with a modern paradox: in a world saturated with artificial intelligence, being unmistakably human becomes the ultimate asset.