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5 Impact of New Technologies on Our Wellbeing

New technological developments promote economic prosperity and well-being beyond the material. But they also harbor new risks. A recent McKinsey study describes five basic effects.

Technology has not only been an important factor for financial service providers since digitization. In the bank blog you will find studies on the most important trends and developments.

Discussions about the effects of new technologies increasingly show the need to measure effects on prosperity and well-being beyond the usual indicators of economic growth and success. These include health improvements, higher life expectancy, greater job security and more equal opportunities. Artificial intelligence (AI), the Internet of Things (IoT) and other aspects of digital transformation can bring numerous benefits to the economy and society there as well.

As part of a study, the McKinsey Global Institute (MGI) examined around 600 technology applications and analyzed the effects on companies, the economy and society. The aim was to find out to what extent new technologies can improve our lives.

Improvements through technology in six areas

Around 60 percent of these use cases are based at least partially on Artificial Intelligence (AI). The spectrum ranges from online training and digital employment services to mobile payment solutions for better financial access, online marketplaces for cheaper goods and services, adaptive learning applications that better prepare young people for the job market, clean technologies for environmental sustainability to AI- based drug research and personalized medicine for longer and healthier lives.

Based on the case studies, the authors developed a prosperity model for the introduction of new technologies. This model not only quantifies the influence of technology on economic output (gross domestic product, GDP), it also takes into account other factors such as health, leisure and equal opportunities.

According to the analysis, the examined technologies can bring about improvements in six areas:

  • Job security,
  • material standard of living,
  • Health,
  • Education,
  • ecological sustainability and
  • Equal opportunity.

Five insights for a better quality of life through technology

In order for technology to improve people's quality of life while at the same time smoothing out the negative consequences as best as possible, the authors make five key findings:

  1. In Europe and the USA, new technologies can increase economic prosperity by 0.3 to 0.5 percent by 2030. Provided that the innovations focus on aspects that increase growth and expand people's skills, rather than just reducing costs and manpower. The extra boost is due to higher productivity growth and lower unemployment. There is also a need for greater public-private cooperation, which leads to the rapid qualification of employees for new tasks.
  2. The additional effects on well-being that go beyond the purely material aspect could be increased by the same order of magnitude - measured against the common indices for non-economic social benefits.
  3. The improvements in health and lifespan could be the biggest contributor.
  4. The negative influences on prosperity growth - such as income inequality and the risk of unemployment - are similar in all scenarios of how the transition can be managed. Resistance to the diffusion of digital technologies does not reduce the disadvantages, but it does reduce the advantages.
  5. Wage and wealth inequalities persist in all scenarios. This supports the belief that further action is needed to address these inequalities.

Technological change in itself is neutral

Technology has made a significant contribution to making people better over the past 40 years. Eckart Windhagen, McKinsey

The study shows that new technologies are bringing about radical changes in the economy and in the workplace. But the same technologies can also help to better cope with some of the challenges. The study shows that this positive trend will only continue if companies use new technologies correctly.

The potential of AI, IoT and automation must not hide the fact that technologies are only tools. It doesn't solve problems by itself.

Actively exploiting the potential of technologies

The study results in clear priorities for the state and business:

  • The state can help drive innovation and improve the well-being of society; To this end, it should promote research and development, including in the health sector, the diffusion of new technologies through appropriate procurement practices and support workers who are suffering from drastic changes in their work environment with retraining and targeted transitional assistance.
  • With their use of technology, companies can concentrate on new products, services and markets, expand the skills of their employees - also with the use of technology - and improve employee mobility by, among other things, creating new careers. Plus, they can focus on the many technology solutions that the research has found to improve both business profits and societal well-being.

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