Quality of Life and Carbon Emissions Reduction: Does Digital Economy Play an Influential Role?

Relying on the digital economy may help reconcile contradictions between the need to improve quality of life (QoL) and the need to reduce carbon emissions. Yet, previous research has not systematically explored the correlation between the digital economy, QoL, and carbon emissions. This paper explores the influence of the digital economy and of changes in QoL on carbon emissions, using a system Generalized Method of Moments (GMM) model. To do this we first use principal component analysis to calculate an objective QoL and a digital economy index using provincial panel data in China from 2006 to 2018. The results demonstrate that both the digital economy and QoL exhibit inverted U-shaped effects on carbon emissions. Our results also show that the growth of the digital economy improves QoL while mitigating the influence of QoL on carbon emissions. Thus, these findings illustrate that policymakers can rely upon the digital economy to help reconcile potential conflicts that arise between QoL and carbon emission reduction goals. Overall, these findings add a new dimension to carbon reduction policies. We propose that policymakers can improve QoL and reduce carbon emissions by coordinating the scale and efficiency-enhancing effects of developing the digital economy. In addition, regions that rely on energy industries should consider the efficiency-enhancing effect of the digital economy when formulating provincial and national emission reduction policies.Key policy insightsChina aims to improve the QoL of its citizens while achieving carbon peak and neutrality goals in the coming decades. This study demonstrates how the digital economy can both improve QoL and reduce carbon emissions.Given the non-linear impact of QoL on carbon emissions, policymakers should not be concerned that climate mitigation policies will deter or damage efforts to generate to QoL improvements.Countries should develop digital economies to improve QoL while simultaneously paying attention to its efficiency improvement effect, which can reduce carbon emissions.Policymakers should focus on the enhanced efficiency improvement effect of the digital economy on the allocation of resources, particularly in regions with energy-intensive industries as economic pillars.