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Pardee Authors Publish ICT/Cyber Publication

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Pardee Institute for International Futures

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The article, “ICT/Cyber benefits and costs: Reconciling competing perspectives on the current and future balance,” has been published in the February 2017 issue of Technological Forecasting and Social Change. The authors, Barry B. Hughes, David Bohl, Mohammod Irfan, Eli Margolese-Malin, and José Solórzano all represent the Pardee Center. This paper is a distillation of work done at the Pardee Center as part of a larger project on systemic cyber risks commissioned by the Zurich Insurance Group and in partnership with the Atlantic Council's Brent Scowcroft Center for International Security. The article is available for free via ScienceDirect as well as our website.

Information and communications technology (ICT)/cyber technologies become ever-more embedded in our economies and societies, bringing both benefits and risk-related costs. The balance between those benefits and costs, over time and across countries, remains poorly understood. This gives rise to conflicting narratives about the future of ICT: either (1) continued rapid benefit growth with new waves of ICT technology; or (2) increasing cyber-attack costs will come to swamp benefits. We explore how the balance between benefits and costs might change at the global, country-grouping, and country-level out to 2030. Because the existing literature provides little foundation for integrated analysis, we did extensive conceptual research and data gathering from diverse sources. The benefits include the growth of the ICT sector itself, its contribution to broader productivity as a general purpose technology, and its benefits for consumers as value for price rises very significantly. The costs include security spending, the impact of adverse cyber events, and opportunity foregone if the technology is underutilized. We extended International Futures (IFs), an existing multi-issue, multi-country, long-term forecasting system with formulations driving ICT/cyber advance and impact. In Base Case analysis we found that, while annual costs related to cyber-attacks and cyber-security spending do cometo outweigh the annual incremental economic benefits from ICT use in high-income countries, over time the compounding nature of the benefits versus the more additive nature of the costs means that the cumulative benefits will outstrip the cumulative costs by tens of trillions of dollars over even medium-term forecast horizons. For lower-income and middle-income countries both annual and cumulative analyses suggest that benefits will continue to outweigh costs. On a global basis the cumulative net benefits could exceed $100 trillion through 2030. Four scenarios with significantly different assumptions about technological development and the unfolding of adverse events changed the total values of benefits and risk-related costs, but not the overall conclusion.