The Impact of the Standard of Living on Digital Performance in the European Union

Abstract

Abstract The Digital Economy and Society Index can be considered a complex indicator that measures the digital performance of the European Union. This indicator has undergone some methodological changes, precisely to be permanently aligned with the European Union’s development strategies but especially with technological development. The aim of the paper is to highlight the impact of the standard of living and its components on digital performance at the level of the European Union. Moreover, the paper will analyse the current state of digital performance at the level of the European Union. The results can serve as a policymaking tool to facilitate the implementation of the digitalisation project at the European level. In this article, hierarchical clustering was used to define groups of countries from the perspective of digitalisation. Ward’s algorithm determined four homogeneous clusters that were presented in the analysis. This approach serves as a hypothesis to test the correlation between digital performance and living standards. Thus, with the help of the linear correlation coefficient, a strong positive relationship was identified between the Human Development Index and the Digital Economy and Society Index. Moreover, at the level of the Human Development Index components, it was identified that individual well-being and education correlate linearly with the Digital Economy and Society Index; therefore, the analysis was completed with a multiple regression to verify this dependence. The last part of the case study is represented by the classic linear regression model, which confirms the hypothesis that living standards influence digital performance.