A Generous-Hearted Life

• Author: Alan Wheatley

A Generous-Hearted Life Finance & Development, December 2015, Vol. 52, No. 4

Alan Wheatley

Alan Wheatley profiles Richard Layard, who believes the basic purpose of economics is the maximization of happiness and well-being

A day after sharing a stage with the Dalai Lama, London School of Economics (LSE) professor Richard Layard is still buzzing. As director of the Wellbeing Programme at the LSE’s Centre for Economic Performance, Layard focuses on the study of happiness. So it’s fitting that he is visibly, well, happy with the previous afternoon’s event. The two had spoken at a meeting of Action for Happiness, a grassroots movement Layard cofounded in 2010 to promote practical action for a happier, more caring society. The Tibetan spiritual leader is the group’s patron. “I asked the Dalai Lama at the end what is the one thing that we should cultivate more than anything else and he said, ‘Warm heart, warm heart,’” Layard recalls with a smile.

Layard was a distinguished labor economist long before he turned his attention to happiness. He is best known for his research in the 1980s on unemployment and for his advocacy of policies to support unemployed people on the condition that they try to find work. This “welfare to work” approach became popular in parts of continental Europe and was a mainstay of British Prime Minister Tony Blair’s economic program.

People first“It’s interesting to see how throughout his career he’s moved from one area to another, but always centered on the well-being of people,” says Martine Durand, chief statistician of the Organisation for Economic Co-operation and Development (OECD) in Paris. “At the heart of all his work is this desire to improve policies and people’s lives: putting people at the center.”

A cynic might say that the Dalai Lama’s wish for a warm heart cannot disguise the cold fact of below-par global growth and persistent poverty in many countries. Isn’t happiness economics, which is still viewed skeptically by many in the profession, a self-indulgent distraction from more urgent tasks? On the contrary, Layard argues: to study what makes people happy is to revive the idea of Jeremy Bentham, Adam Smith, and other founders of economics that public policy should aim to secure the greatest happiness for the population. “It has been, since the 18th century Enlightenment, the central idea in Western civilization that the measure of a good society is how happy the people are. So it’s not a novel idea,” Layard, 81, says in an interview with F&D in his office at the LSE.

Unfortunately, as Layard sees it, along the way economics partly lost sight of this original purpose. The maximization of utility, or happiness, became conflated with the maximization of consumption and then with income and GDP. Layard’s contribution, along with that of other economists, including Andrew Oswald of Warwick University, is to have helped reassert the importance of factors other than income in determining happiness.

“To understand how the economy actually affects our well-being, we have to use psychology as well as economics,” was how Layard put it in one of a trio of lectures he gave on the topic at the LSE in 2003. GDP, he added, was a “hopeless measure of welfare.” Those lectures were the germ of a best-selling book published in 2005, Happiness: Lessons from a New Science, in which he argued that seven major factors affect how happy we are, defined as enjoying life and feeling wonderful: our family relationships, financial situation, work, community and friends, health, personal freedom, and personal values.

If most of these criteria sound suspiciously subjective, Layard says they are not. They are measurable. He became convinced he could write the book after a neuroscientist, Richard Davidson, showed that measurements of brain activity correspond consistently over...