A study of the impact of the digital economy on wellbeing eco-efficiency – Empirical evidence from G20 countries

Eco-efficiency aims to maximize economic output at minimal environmental cost but often overlooks social welfare. To address this gap, this study develops the concept of well-being-oriented eco-efficiency (WEE), which integrates resource use, environmental pressure, and multidimensional human well-being, and applies it to G20 economies from 2010 to 2022. WEE is measured using a non-radial Super-SBM model with undesirable outputs, and the role of the digital economy (DED) in enhancing WEE is examined through fixed-effects regressions, interaction terms, lag-structure analysis, and IV-2SLS estimation, thereby addressing issues of heterogeneity and endogeneity. The DED index is constructed using principal component analysis across four pillars: digital infrastructure, industrial development, innovation environment, and digital applications. The results indicate that the average WEE improved over the study period, although persistent cross-country disparities remain. DED significantly increases WEE (β ≈ 0.89, p < 0.01), with stronger effects observed in developing economies. Digital infrastructure and innovation yield short-term benefits; industrial development drives medium- to long-term gains; and digital applications produce modest yet sustained effects. Conversely, higher carbon intensity and an excessive share of fiscal expenditure are detrimental to WEE. These findings highlight the potential of integrating digital and green transitions through measures such as investment in digital public infrastructure, industrial internet development, green procurement and finance, and fiscal restructuring linked to measurable eco-welfare KPIs, thereby offering practical guidance for sustainable development in both developed and developing contexts.