Tech 6

2.
GDP, well-being,
and welfare: How we
measure the impact
of technology
Comparisons of living standards over time and across countries have often relied on
measuring GDP per capita, adjusted for purchasing power. In this paper, we look
more broadly
at the potential impact of technology diffusion, and the associated choices by
governments
and businesses, on societal well-being. No single methodology for quantifying these
effects
has been established, so we draw inspiration from four complementary (and somewhat
overlapping) branches of thinking: alternative indicators of economic and social
progress,
research on happiness and subjective well-being, health economics, and welfare
economics.
Each of these approaches lends itself to a different type of analysis, as explained
below. All
highlight an important truth: in a complex economy, life satisfaction is determined
by multiple
positive and negative components, which in turn affect different individuals
differently. We
therefore need methods that go beyond simple aggregates.
For this paper, we synthesize the broad spectrum of factors that individuals and
societies
value into a societal well-being framework. We then explore six of these factors
more fully
in the thematic deep dives that follow, on job security, material living standards,
health and
longevity, education, environmental sustainability, and equal opportunities.
Finally, for our
impact quantification, we narrow down the set of factors further, to focus on those
that are
possible to incorporate robustly into a calculation of GDP-equivalent welfare.
Our framework: Key factors of societal well-being
A significant body of research exists to provide measures of well-being that go
beyond
GDP. The Stiglitz Commission report was one of the first to propose alternative
indicators of
economic performance and social progress.33 Other sets of indicators have been
proposed
through the United Nations� Sustainable Development Goals, with some trials of
summary
measures such as the UN�s Human Development Index and the Social Progress Index put
forward by Harvard economist Michael Porter and his colleagues.34 The OECD�s Better
Life
Index captures a comprehensive set of dimensions that have value to individuals and
society,
and many countries, such as New Zealand, have launched their own well-being
initiatives, with
associated metrics.35
These frameworks converge, as they all attempt to address some of the key
shortcomings
of GDP as a measure of progress. Some of them, including the World Happiness Index
and
Richard Layard�s work on happiness, also build on large-scale analysis of self-
reported
life satisfaction and other data, allowing researchers to distill the factors that
are most
consequential for people�s well-being.36 Such research often finds that household
income is
only one of many factors, with social life, relationships and health, and not being
unemployed
also being important contributors to well-being (Exhibit 7).
33 Joseph E. Stiglitz, Amartya Sen, and Jean-Paul Fitoussi, Report by the
Commission on the Measurement of Economic
Performance and Social Progress, 2009. 34 See for example, Michael E. Porter and
Scott Stern, Social Progress Index, Social Progress Imperative, 2017. 35 Policy use
of well-being metrics: Describing countries� experiences, OECD, November 2018. 36
John F. Helliwell, Richard Layard, and Jeffrey D. Sachs, World Happiness Report
2019, March 2019; Richard Layard,
Happiness: Lessons from a New Science, New York, NY: The Penguin Press, 2005.
Tech for Good: Smoothing disruption, improving well-being 15
For this paper, we have summarized the factors into the ten shown in Exhibit 8. We
believe this
framework to be comprehensive and fit for the purpose of analyzing technology
impacts but
acknowledge that it is only one way of presenting the different dimensions of well-
being.
We start with basic economic prosperity, most viscerally felt by individuals
through job
security and material living standards, especially in terms of the purchasing power
of
their wages. We include education in this group, given its significant influence on
people�s
prosperity over their lifetimes.37
The second group of factors considers aspects of life that are known to contribute
to
individual well-being, over and above economic prosperity. These include health�one
of the largest factors in well-being�safety, housing, and social connectedness. The
last
refers to the crucial role that relationships play in determining people�s
happiness, either
online or offline, whether at home, at work, or in the community.38 Social
connectedness is
also correlated with health; for example, a growing literature looks at the
consequences of
loneliness on mental health.39
The third and fourth groups operate less at the individual and more at the societal
level.
Sustainability�both economic and environmental�is an important consideration, so
that
humans� instinctive tendencies to prioritize short-term gains and to discount
future risks
do not cause long-term harm. Finally, the fabric of society is fundamentally
dependent on
perceptions of fairness, reflected in the degree to which all members benefit from
their rights
37 Technically, education is mostly a driver of the other factors rather than an
independent driver of well-being, but given its
prominence in human capital and economic development discussions, we have included
it separately. See, for example,
Education for global development, �Why education matters for economic development,�
blog entry by Harry A. Patrinos,
May 17, 2016, blogs.worldbank.org/education/why-education-matters-economic-
development. 38 Social media is a significant recent form of connectedness that can
have welfare consequences. See Paul Best, Roger
Manktelow, and Brian Taylor, �Online communication, social media and adolescent
well-being: A systematic narrative
review,� Children and Youth Services Review, June 2014, Volume 41. 39 Ed Diener et
al., �Social well-being: Research and policy recommendations,� in John F.
Helliwell, Richard Layard, and
Jeffrey D. Sachs, eds., Global Happiness Policy Report: 2018, Global Happiness
Council, 2018.
Exhibit 7
Many factors besides income contribute to individuals� well-being.
Factors affecting individual well-being in the United Kingdom
Increase in self-reported life satisfaction,
on a scale from 0 to 10 for a unit increase in each factor
Source: British Household Panel Survey, 1996�2009; British Cohort Study; Measuring
wellbeing and cost-effectiveness analysis: Using subjective wellbeing, What Works
Centre for Wellbeing, Discussion paper 1, December 2016; McKinsey Global Institute
analysis
0.19
0.17
0.17
0.17
0.11
0.09
0.07
0.07
Spouse/partner
Health
Social life
Amount of leisure
Job
Flat/house
Use of leisure
Income
Determinants of life satisfaction at age 34,
Bubble size = partial correlation coefficient
Emotional
health Married/
cohabiting Not unemployed
Not
involved
in crime
Physical
health Income
Education
level
16 McKinsey Global Institute
and have equal access to opportunities. Overall, societal trust�i

Tech 6

Uploaded by

Copyright:

Available Formats

Tech 6

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Tech 6

Uploaded by

Copyright:

Available Formats

2.

You might also like