It is tempting to try to assign weights to these factors, and many of them can

indeed
be measured or proxied using quantitative metrics. However, our literature survey
overwhelmingly shows that, first, they are all important; second, they are all
highly
interconnected; and third, they are affected through many direct and indirect
channels.
40 Social trust is often found to be lower where income inequality is greater. John
F. Helliwell, Haifang Huang, and
Shun Wang, �Changing world happiness,� in World Happiness Report 2019.
Exhibit 8
Key contributors to societal well-being can be summarized in a framework of ten
factors
and mapped to our welfare calculation.
Source: United Nations� Sustainable Development Goals; OECD�s Better Life Index;
Human Development Index; New Zealand Living Standards Framework; Joseph E.
Stiglitz, Amartya Sen, and Jean-Paul Fitoussi, Report by the Commission on the
Measurement of Economic Performance and Social Progress, 2009; Michael E. Porter
and Scott Stern, Social progress index, Social Progress Imperative, 2017; 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 Council for Happiness and Well-being, 2018; Kirk Hamilton and Cameron
Hepburn, National Wealth: What is Missing, Why it Matters, Oxford Scholarship
Online, October 2017; McKinsey Global Institute analysis.
1 Through stress component of health and longevity. 2 Through forced component of
leisure. 3 Incremental impact of technology scenarios captured implicitly through
the impact of productivity improvements due to technology diffusion, automation,
and
innovation.
Well-being factors Sub-factors
Covered in
thematic
deep dives
Explicitly
included in
welfare model
Components of welfare
modeling impacted
Prosperity Job security Risk of unemployment, job
stability, job quality ? ? GDP, consumption to income
ratio, consumption inequality,
risk aversion to unemployment,
health and longevity1
, leisure2
Material living
standards
Wages, purchasing power,
leisure, inequality, wealth ? ? GDP, consumption to income
ratio, consumption inequality,
leisure
Education Quantity, quality, and
accessibility of education ? (GDP3)
Individual
well-being
Health Life expectancy, physical and
mental health ? ? Health and longevity
Safety and
housing
Personal, material and cybersecurity, quality and
affordability of housing
(GDP3)
Social
connectedness
Quality and number of
relationships, community,
social capital
Not explicitly modeled
Sustainability Environmental
sustainability
Climate change, pollution,
waste, biodiversity, natural
capital
? (GDP3)
Economic
sustainability
Long-term tangible, human,
and knowledge/
intellectual capital
(GDP3)
Fairness
and trust
Equal
opportunities
Social mobility, inclusiveness, equal access to
services
? (GDP3)
Trust in society Trust in actors in society,
privacy, institutional capital
Not explicitly modeled
Tech for Good: Smoothing disruption, improving well-being 17
For example, job security can create financial prosperity, reduce stress, enhance
social
relationships, and boost health and well-being. More leisure time enables more time
to be
spent with friends and family, enhancing social connectedness. Trust in society is
often
negatively linked to poor job security and levels of safety.41 We have not
attempted to create
a quantitative index or other summary metric; rather, for quantification, we have
focused on
welfare, which captures many, but not all, components of this framework.
A focus on six themes relevant for �Tech for Good�
We have chosen to go deeper into six well-being themes that are most frequently
discussed
as particularly relevant in the context of technology adoption. These themes�job
security,
material living standards, health, education, environmental sustainability, and
equal
opportunities�are areas in which technology could potentially be disruptive and
create
problems but can also be used to mitigate those same risks and add significantly to
welfare.
They are also areas where existing use cases illustrate the potential of technology
to �do
good.� Other MGI and McKinsey research covers some of the other factors, such as
housing,
safety, and security.42
We start by taking a new perspective on the future of work. Surveys of people�s
attitudes
indicate anxiety about technology and jobs.43 As we have found in previous MGI
research,
job security and wages could be disrupted by rapid technology adoption. In our deep
dive,
we consider ways in which technology itself could alleviate these issues.
Technology may
also exacerbate inequalities. We therefore look at two key enablers of equality of
outcomes:
education and equal opportunities. Health, including longevity, is included as a
theme due to
its dominant role in people�s well-being: it is often cited as one of the most
important factors
in its own right. Critically, being healthy also contributes to job security,
wages, and social
connectedness. Finally, we consider the theme of environmental sustainability.
Technology
holds significant promise to reduce the costs and improve the effectiveness of
actions to
preserve and enhance the planet�s natural capital.
Economic welfare as a quantification of technology�s impact
We use the concept of economic welfare as a way to put the well-being factors on a
par
with GDP and to simulate the impact of technology paths on them quantitatively.
Welfare is
a specific branch of economics that quantifies utility across the population and
allows us to
present well-being outcomes in monetary�or �consumption equivalent��terms. For this
paper, we draw extensively on a welfare methodology proposed by Charles I. Jones
and Peter
E. Klenow of Stanford University, and subsequently built on by various researchers,
including
those at the International Monetary Fund.44
41 Carol Black, among others, has focused on the health aspects. See, for example,
Working for a healthier tomorrow: Work
and health in the UK, UK Government Department of Work and Pensions, March 2008.
For social relationships, see World
Development Report, Jobs, World Bank, 2013. For trust, see Yann Algan et al., The
European trust crisis and the rise of
populism, Brookings Institution, September 2017. For our prior research on job
security, see Testing the resilience of
Europe�s inclusive growth model, McKinsey Global Institute, November 2018. 42 See,
for example, Reinventing construction: A route to higher productivity, McKinsey
Global Institute, February 2017;
Policing: A vision for 2025, McKinsey & Company, January 2017; Laying the
foundation for success in the connectedbuilding era, McKinsey & Company, October
2018; Six ways CEOs can promote cybersecurity in the IoT age, McKinsey &
Company, August 2017. 43 See, for example, Aaron Smith and Monica Anderson,
Americans� attitudes toward a future in which robots and computers
can do many human jobs, Pew Research Center, October 4, 2017; Workplace stress
continues to mount, Korn Ferry,
November 14, 2018. 44 Charles I. Jones and Peter E. Klenow, �Beyond GDP? Welfare
across countries and time,� American Economic Review,
September 2016, Volume 106, Number 9; Geoffrey J. Bannister and Alexandros
Mourmouras, Welfare vs. income
convergence and environmental externalities, International Monetary Fund working
paper number 17/271, November
2017; Marc Fleurbaey and Guillaume Gaulier, �International comparisons of living
standards by equivalent incomes,� The
Scandinavian Journal of Economics, September 2009, Volume 111, Number 3.