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The Human Utility Factor: A Computable Welfare Metric That Reframes AI Governance as a Constrained Optimisation Problem

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  • Sivasathivel Kandasamy

Abstract

Existing AI governance frameworks, including the EU AI Act and NIST AI RMF, address safety, transparency, and accountability but do not operationalize quantitative constraints on macro-socioeconomic stability. As a result, AI systems may satisfy regulatory requirements while contributing to labor displacement, rising inequality, and reduced economic resilience. We introduce the Human Utility Factor (HUF), a differentiable welfare metric that models the interaction between Agency, Wellbeing, and Economic Stability as functions of three actionable policy levers: automation depth, redistribution intensity, and employment coverage. HUF yields a closed-form optimal automation level and a minimum redistribution threshold below which no level of automation is welfare-positive, transforming high-level governance objectives into computable constraints. We evaluate HUF using a three-agent multi-agent reinforcement learning framework across U.S., Canadian, and Nordic policy regimes. Both analytical and PPO-based agents identify welfare-optimal operating regions and reveal a critical failure mode: welfare metrics that do not explicitly constrain redistribution can converge to high-automation equilibria that satisfy the metric while undermining its intended societal objectives. Our results suggest that AI governance is fundamentally a constrained optimization problem rather than a compliance exercise. HUF provides a quantitative framework for evaluating automation policies, identifying socioeconomic stability boundaries, and supporting governance decisions under accelerating AI deployment.

Suggested Citation

  • Sivasathivel Kandasamy, 2026. "The Human Utility Factor: A Computable Welfare Metric That Reframes AI Governance as a Constrained Optimisation Problem," Papers 2607.26068, arXiv.org.
    • Handle: RePEc:arx:papers:2607.26068
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