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Happiness and public policy

12 Jul 2011 | Richard Layard

Happiness is now on the agenda, and about time too. But is this just a trendy fad, or should there be a permanent change in the way we think about the purposes of politics?

There has to be a permanent change. It is not of course new to say that the aim of government is to enable people to lead happier lives. In the eighteenth century enlightenment it was standard to believe that the best society is where the people are happiest, and the best policy is what produces the greatest happiness. These admirable views did much to inspire the social reforms of the century that followed. But in many cases it was difficult to apply the principle because so little was known about what makes people happy. However the last thirty years have seen a major scientific revolution, and we now know much more about what causes happiness - using the results of psychology and neuroscience.

The first thing we know is that in the last fifty years average happiness has not increased at all in Britain nor in the USA - despite massive increases in living standards. This is because above an average income of about £10,000 per head richer societies become no happier than poorer societies. Richer individuals are of course on average happier than poorer people in the same society, but this is largely because people compare their incomes with other people. If everyone gets richer, they feel no better off.

In rich societies like ours what really affects happiness is the quality of personal relationships. Always top comes the quality of family life, or other close personal relationships. Then comes work - having it (if you want it) and enjoying the meaning and comradeship it can bring. And then comes relationships with friends and strangers in the street.

Some societies are much happier than others - and Scandinavian countries always come out near the top. This is largely because people trust each other more there than in other countries. In Britain and the US the number of people who believe that "most other people can be trusted" has halved in the last fifty years, and this reflects the growth of an individualism which makes personal success more important than almost anything else.

These facts call for a revolution in how we think about ourselves and about how the government can help us to flourish. It becomes clear that faster economic growth is not the most important objective for our society. We should not sacrifice human relationships nor peace of mind for the sake of higher living standards (which will be growing anyway).

We need a fundamental rethink of our policy priorities, which would give higher priority to family life and the way people support each other in communities, at work, and as individuals. This debate is only just beginning, but here are a few obvious points.

Expenditure on mental health

When it comes to public expenditure, there is one obvious area of shameful neglect. One in six Britons is currently a diagnosable case of clinical depression and/or chronic anxiety disorder. Only a quarter of these people have been in treatment. For most the only available treatment has been pills prescribed by a non-specialist GP. This was in flagrant contravention of NICE Guidelines which say these people should also be offered modern evidence-based psychological therapy, which is at least as effective as drugs. That is what the majority of patients want, and, if they cannot have them, many patients prefer to go untreated. This volume of untreated suffering is especially scandalous when it turns out that treating it would involve no net cost to the Exchequer - due to the savings on incapacity benefits and lost taxes. [1]

So why has this situation persisted? It reflects a deeply-rooted form of materialism or what one might call 'objectivism' - a belief that the subjective world is too fuzzy for us to take it seriously. Yet the subjective world is what we experience each moment of our lives. In truth the severity of depression and anxiety states can be measured quite accurately, and the best therapists are as dedicated as are physicians and surgeons to measuring the impact of their treatments.

Fortunately the last government and this one have taken action to put this right. By 2013 the Improved Access to Psychological Therapy Programme (IAPT) should provide evidence-based therapy to all who need it throughout the country. And it is beginning to be extended to children.

But at the same time many people with other mental health problems face the risk of cuts in expenditure. These include people with psychoses, learning difficulties and diseases of old age. Mental health trusts are in danger of being cut in order that physical healthcare can have more money to pay for more expensive treatments. Yet mental illness has a bigger impact on happiness than most of the illnesses treated in the NHS. It's another example of discrimination against subjective experience in favour of what appears to be more objective.

Building character in childhood

It would of course be much better to prevent mental illness than to have to treat it. This ought to be a major role of our educational system - to implant the seeds of a happy life and of one that brings happiness to others.

Most schools pay too little attention to this. It is not easy to teach but well-tested materials are becoming available at an encouraging rate. (One example is the Penn Resiliency Programme now being used in three of our local authorities.) [2] Teachers should be taught to use these materials, and in secondary schools Personal Social and Health Education (PSHE) ought to be a specialist subject, in which teachers can specialise in their post-graduate certificate in education.


Another obvious area where the state has to become more involved is the quality of parenting. If bad parenting produces crime and bad behaviour - let alone personal misery - the state must act at many levels.

Parenting should be taught in schools. Above all people should recognize the huge responsibility involved in having children well before they decide to have their own. Then parenting classes should be offered to parents around their first pregnancy, and these should cover not only biology but also the emotional side of child-rearing - including its impact on the relations between the parents. And finally there should be high quality services available when parents run into trouble. There exist evidence-based interventions which should be readily on offer. [3] Here as elsewhere, what is different from the past is that the new interventions rely less on the few people of great wisdom and more on the findings of science which can be implemented by ordinary mortals.

Advertising and gambling

Regulation should also reflect new priorities. Take two examples where tastes are clearly affected by public policy. Advertising is clearly meant to change our tastes, so we are entitled to ask, Is the change for the better? Undoubtedly some advertising provides valuable information. But a lot of advertising makes us feel we need things we previously didn't need. The advertiser may have only wanted us to buy his brand rather than another. But the overall effect is to make people want more. This means that we are less contented with what we have. The most serious effect is on children, who put parents under intolerable pressure to buy the latest doll or the coolest make of footwear. The waste is extraordinary, and children get the idea that they need this vast array of spending just to be themselves. That is the reason why Sweden bans commercial advertising directed at children under twelve. [4] Every country should learn from this example.

Similarly in the case of gambling. Laissez faire economics says, 'If people are willing to pay, let them spend their money as they want.' But the expansion of gambling can so easily produce addicts. Under existing gambling laws there are at least 150,000 gambling addicts in this country, and this addiction blights both them and their families. If gambling laws are eased, some people might gain a little extra enjoyment at the cost of increased misery for others. It is hard to see how this could be justified.

Taxation and redistribution

In almost any political philosophy, redistribution is one role of the state. The greatest happiness principle bases the case for redistribution partly on the diminishing marginal utility of income. If there were no efficiency cost of redistribution, this fact would argue in favour of total income equality. But there is an efficiency cost, since taxes (spent on services) do discourage work effort.

But happiness research puts work effort into a new perspective. Individuals work partly in order to raise their income relative to others. But it is impossible for the average person to raise his income relative to others. So some of the work effort is wasted. It is like an arms race. Thus, if taxes somewhat discourage work effort, they are orchestrating a desirable arms-limitation agreement. They are reducing the unnecessary sacrifice of family life and social life that excessive work entails. They are protecting the work-life balance.

Existing knowledge shows this is a serious issue, but does not offer a precise figure for policy use. So I am not saying that taxes should be higher than they are - but they should be higher than if you had not considered this point.

And there are other arguments for a more equal society. Cross-country evidence shows clearly that better social conditions go with greater equality. [5] Societies with more equal incomes also have more equal relationships and higher levels of trust. So a happier society would almost certainly have to be more equal.


We are at the beginning of a major revolution in public values, reflecting two main forces. One of these is our historical experience. Increasingly people realise that ever-increasing affluence brings less enhanced satisfaction than they expected. There is also a major revulsion against many blinkered forms of managerialism that appeal only to self-interest. People are looking for something more in life - involving less selfishness and more devotion to a common cause.

At the same time there is the new science of happiness, which provides a more accurate account of what makes people happy than the cruder forms of elementary economic theory. It shows for example that people who are mainly concerned with their own welfare are less happy than those who are more concerned with others. And it shows that these attitudes can be affected by public policy.

This points the way for a revolution in political philosophy. At present we have no coherent political philosophy that inspires our society. Rampant individualism has filled this vacuum and contributes to alienation from the political process. But individualism is inherently inconsistent. It appears to promote the interest of individuals but it cannot do so, because the other individuals we would like to encounter would not be individualistic.

Instead we need a political philosophy which is intrinsically defensible but also internally consistent. Consistency means that, if people use the philosophy in their individual lives, the result will be the society which the philosophy advocates. The principle of the greatest happiness satisfies this requirement. We want a society where people desire to produce as much happiness in the world as they can. If everyone thinks like that, they will all end up happier. This is a consistent philosophy.

It would, of course, involve reversing a trend, and many people assume that trends go on forever. That is not how we should read history. In many areas we see something more like cycles. For example we can observe clear ups-and-downs in the extent to which social responsibility has been stressed in our national lifestyle. In the early seventeenth century it was de rigueur; while the eighteenth century was more easy-going. The nineteenth century saw increased social responsibility [6]; while the last forty years have seen increasing individualism. It is quite possible that the current trend will be reversed again in the coming decades, as it was two hundred years ago.

We do not need a return to Victorian values, some of which were pretty gloomy. Instead, we need a philosophy which fully values happiness and enjoyment, but at the same time enjoins us to strive for the happiness of others. And that is the philosophy of the Greatest Happiness.


Lord Richard Layard is Emeritus Professor of Economics and Head of the Well-Being Programme at the London School of Economics. He is a co-founder of Action for Happiness.

[1] R. Layard, D. Clark, M. Knapp and G. Mayraz, Cost benefit analysis of psychological therapy, National Institute Economic Review, October 2007.
[2] Challen, A.R., Machin, S.J., Noden, P. and West, A. (2010), UK Resilience Programme Evaluation: Second Interim Report: DFE, Research Report DFE-RR006
[3] Webster-Stratton, C., Hollinsworth, T. and Kolpacoff, M. (1989), "The long-term effectiveness and clinical significance of three cost-effective training programs for families with conduct-problem children," Journal of Consulting and Clinical Psychology, 57(4), 550-53.
[4] For the definition of the law see www.konsunentverket.se
[5] Wilkinson, R. and Pickett, K, (2009), The Spirit Level: Why more equal societies almost always do better, London: Allen Lane/Penguin.
[6] Gorer, G. (1955), Exploring English Character, New York: Criterion Books.


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