The Effects of Innovation on Well-being: A Conceptual Framework

Innovation affects human well-being in a complex variety of ways. The economics of innovation has typically focused on the positive economic impacts that new technologies have on well-being through income growth and consumption dynamics, and often neglected a variety of other non-economic and negative effects. This paper presents a broad conceptual framework of innovation and well-being that seeks to combine economic and non-economic impacts, positive as well as negative, into a comprehensive agent-based model (ABM). The ABM investigates well-being determinants and dynamics for a population of heterogenous agents. I empirically calibrate the model for the US economy. The aggregate long-run outcomes of the model are stagnant average well-being cum increasing disparities between rich and poor individuals. The key novelty of the framework is that it points out seven distinct effects of innovation, and it shows that these mechanisms have different relevance for the well-being of individuals. The paper combines insights from different strands of research at the intersection between the economics of innovation and well-being studies, and it points out directions for future research on this topic.