Nobel Prize-winning economist Robert Shiller warns that artificial intelligence (AI) is probably the biggest challenge facing the jobs market and quite possibly all of society.

"What we're seeing is something unprecedented, which is the arrival of artificial intelligence, which has a big impact," the Yale University economics professor told CNBC.com.

Shiller is worried because AI is an unknown entity. "It creates tremendous uncertainty and impacts different people differently," Shiller told CNBC ahead of the World Economic Forum (WEF) in Davos, Switzerland.

"And some people could be left out," said Shiller, who was awarded the Nobel Prize in Economic Sciences with Eugene Fama and Lars Peter Hansen in 2013.

"It might turn out well. It may be that we'll have more school teachers and smaller classes, and people will be taking care of the elderly and we'll be living longer and there'll be people to look after the elderly. We'll see," said Shiller, who developed the cyclically adjusted price-earnings (CAPE) ratio market valuation measure, which is calculated using price divided by the index's average historical 10-year earnings, adjusted for inflation.

"But, for me, the big thing is the uncertainty we face because of AI, it could be extremely disruptive." said Shiller, who also helped develop the widely-followed S&P/Case-Shiller Home Price Indices.

Shiller isn't alone in his dire prediction.

Alibaba founder Jack Ma predicts that in 30 years. people will work “four hours a day and maybe four days a week.”

He also warned CNBC that artificial intelligence could set off World War III, but humans will win.

"The first technology revolution caused World War I," Ma told CNBC in a recent interview. "The second technology revolution caused World War II. This is the third technology revolution."

The goal of artificial intelligence should be making machines that do things humans cannot do, rather than making them like humans, according to Ma.

"Wisdom is from the heart," Ma said. "The machine intelligence is by the brain [...] You can always make a machine to learn the knowledge. But it is difficult for machines to have a human heart."

(Newsmax wire services contributed to this report).