Should governments promote happiness?

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Traditional economics is founded on a mistake: that income can be equated for happiness as the ultimate aim of government. It is long overdue that we start rethinking how governments and economists should work, because the aim of public policy should be to make people happier. In this lecture, Lord Layard will explain the foundations of why income is a poor approximation for happiness, as has been shown by modern psychological research. The next question to be addressed will then be of how governments should change in order to take these findings into account and make the world a better place in which to live. Perhaps it is not only initiatives such as psychological therapy for the depressed and counselling for children, but also things such as taxation that might play an important role in governments promoting happiness. Professor the Lord Layard of the London School of Economics and Political Science will be introduced by Dr Raj Persaud.

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Should Governments Promote Happiness?

Professor the Lord Layard



I would like to talk about the question 'Should governments promote happiness?' and, if you want the short version of the lecture, my answer is yes!  But I want to discuss the question in four parts.  First, I would like to discuss the history of the idea, and then I want to defend the idea from the philosophical point of view, then I want to say what I think we know about what would be conducive to the happiness of the people, and then finally I want to draw out some of the policy implications for governments form what we know.  So the outline of this evening is: one, history; two, the philosophy; three, the psychology; four, the policy.






The idea that governments should promote happiness is not new at all.  In fact, it goes back to the 18th Century and the English Enlightenment, which was spreading over parts of continental Europe and very much into the United States at the time and even went to form the basic thinking behind the American Constitution.  The idea is simply that the best society is the one in which the most people are happy and the fewest number of people are miserable, and that therefore, the job of the government is to establish the conditions where as many people will be happy as possible and as few people will be miserable.  I think this was an extraordinarily noble and enlightened view.  It continued to influence the educated classes throughout most of the 19th Century, and of course it was a great impulse behind many of the social reforms of that period. 


But in the 20th Century it fell into disrepute because of philosophical scepticism as to whether you could know what is going on inside anybody other than your own self.  The fact that we could not actually have human society unless we had some idea of what was going on inside somebody else did not influence these philosophers.  Indeed, nor did it influence the psychologists, who abandoned the idea that psychology was the study of the inner life in favour of the view that psychology was the study of behaviour and you do not have to have a picture of what is going on inside somebody in order to understand their behaviour. 


This behaviourism in psychology was then adopted in economics.  It was unfortunately led by Lord Robbins at the London School of Economics, who was one of my mentors.  This was based on the same grounds, that you could not know what was going on inside people so it was ridiculous to suppose that the economy should serve the happiness of the people.  So then the question was of what it could serve?  It was thought that all it could be thought of as serving was the means that people might have to be happy - in other words, their purchasing power - and so we got to this extraordinary idea that the measure of the welfare of the population was the Gross Domestic Product, the GDP.  Of course, this led to quite extraordinary situations, where people wanted to do things that would improve human happiness but they were told you could not do it because it was bad for the economy, as if the economy was, in some sense, something which was different from the people that constitute it.  This was really a shocking thing to have happened. 


Fortunately the situation has now changed in psychology.  Within the last thirty years, psychologists have gone back to studying what happens inside people and trying to explain it through that.  But how do you know what is happening inside somebody?  Obviously, one way of finding out is that you could ask them how they felt, and that had been done before.  Then people started pointing out that, if you tell someone that they do not know how to interpret what a person is saying, then they can ask someone who knows that person well to say how they think that person feels, and sure enough, there is quite a good correlation.  When you ask a friend of somebody how happy they think a person is, the result is rather similar to how happy the person themselves think they are.


But the thing which I think made a very important impact intellectually was when the neuro-scientists came into this, and in particular, the ones at the University of Wisconsin.  They identified the areas in the brain in which positive and negative feelings are experienced, in the sense that you could see in areas of activity in the brain that corresponded to happiness and sadness in people.  They could subject a person to something that made them happier and they would say they were happier, they would look happier, and sure enough, the electrical activity in the positive areas of the brain was going up, and similarly, you could make them miserable and it was going down.  Also, you could do the same when you compared people, and you would find that people who looked happier and said they were happier had more electrical activity in those areas of the brain.  This was a very important finding for me and my research, because I think it puts to rest forever the arguments that say that what is subjective is in some sense not real and not actually as objective as the objects around us such as tables or chairs.  What we feel inside of us is as objective as the tables and chairs we see around us.  Of course, the fact that we can show that what we feel can be measured electrically is enormously convincing to many sceptics, like most economists are, for instance.


From this we know that we now have the basis for measuring happiness.  Psychiatrists have actually been measuring unhappiness rather well for a long time and we now have ways of measuring the upper ends of happiness as well.  Against the backdrop of this, it is feasible to talk about policies that are conducive to the increase of happiness and the decrease of misery.  But the next question: is it desirable to have the policies aiming at those objectives?






Obviously, there are many goods besides happiness: freedom, autonomy, achievement, self-sacrifice, etc.  You can get an enormous list of goods from anybody if you talk to them about what the things that are important them and their enjoyment of life.  But you can go on and ask somebody who says something is a good why they think it is a good?  For instance, you could ask somebody why they think self-sacrifice is good.  They will give you reasons - because it makes other people happier, for example.  You could ask why they think freedom is good and you might get the answer that it makes people feel better.  That applies to nearly any good that you can think of, but if you ask somebody, 'Do you think it matters if people feel good? Why does it matter if people feel good?' you will find that they cannot give a reason, and that is because the belief that feeling good is what we most want is so deep in our nature, that nobody can give a reason why it is import for people to feel good.  That is my philosophical argument of why I think of happiness as the overarching good, and I think of all these other goods as being instrumental to it and deriving their goodness from the fact that they contribute to the happiness of society.  So I do think we can argue along lines which are not totally different from the ones that Aristotle used; that the good society is the one where there is the most happiness and the least misery.  This is not, incidentally, a recipe for selfishness, of course.  It does not mean that people should do all they can to promote their own happiness; it means they should do all they can to promote the overall happiness of everyone in the world.  As we know, if people pursue only their own happiness, they will not make other people happy, but they actually will not make themselves happy either.  So I think it is a very consistent philosophy that the happiness of the world is the objective we should all set ourselves as increasing in life, and of course what we would also expect the government to do.


I just want to make one qualification to what Adam Smith and Jeremy Bentham in particular thought about what the objective was.  Bentham formulated it more clearly than anybody else when he said that we should maximise the average happiness of the population, which means giving the same weight to extra happiness for somebody who is already happy or to less misery for somebody who is miserable.  I think we would think it is more important to reduce misery than it is to increase happiness in areas of the population where it is already considerable.  But, with that qualification, I hope that you might agree that it would be good to have a society in which there is as much happiness and as little misery as possible.


When I wrote about this in my book, saying that from this it followed that governments should promote happiness, I got at least two reviews which disagreed with this view.  One was entitled 'The Happiness Police', and the other was 'The Bureaucrats of Bliss'.  Their argument was that the government cannot force people to be happy, but this is a rather fatuous argument.  For instance, the government can have a policy about universities, but it does not mean that the government in therefore trying to force people to go to university.  It can create the conditions in which people can benefit from higher education, if it thinks that is important.  If a Government has had an enormous interest in how productive people are, you cannot force people to be productive, you can only try and create conditions in which they can be productive.  In the same way, a government can try to create the conditions in which they can be happy, and what I want to argue is that the overarching objective should be to create the conditions in which people can be happy.  So I think it is not only feasible to think about that as an issue, in the sense that we can measure happiness, but it is very much desirable.






I now want to address some important questions about the nature of happiness: what causes happiness and what do we know about it?


We now know quite a lot about this rapidly growing subject area of the psychology of happiness.  I do not want to give you the impression that we have got all the answers, but we certainly have a lot of knowledge in this area.  We have achieved such knowledge because we can measure the happiness of individuals, compare different people, compare societies, take the same person over time and see how their happiness goes up and down and how that is effected by their experience of life.  We know a lot of the factors that influence happiness as a result of these studies.


So let me take a few of these factors, and since we are talking about the Government, let me take personal freedom first.  That is an incredibly important factor affecting the happiness of people.  The easiest way you can see this is by looking at the average happiness in different countries, and you will see that all the bottom twenty countries were the ones, when the studies were undertaken in the early 1990s, which were parts of the Communist block.  Roughly speaking, you have the ordinary first world happiest, then you have the third world next, and then, at the bottom, you had the Communist countries.  From this it is quite clear that this is not an issue of income but of government regime.  Therefore it clear that personal freedom is a very important element of happiness, but one that we can, fortunately within normal societies, more or less, assume.


Since we are moving through all the books of Adam Smith, let me come onto income.  Obviously, in very poor countries which are near the margins of subsistence, extra absolute income is highly conducive to happiness.  But when you get to the first world, people care about income just as much as they do in poor countries.  It is a fact that richer people are happier than poorer people, and people become happier as they become richer.  Anyone who says the opposite is flying in the face of the evidence.  So income is important to people in all countries, both the rich and the poor.  But, why is it important? 


Essentially, the answer is that people feel that income is important and are interested in it when their income is compared with some norm which is largely derived from what other people have; people have their happiness effected by their income due to comparing it to the income other people earn.  In my book I have in my book of an employee speaking to the boss, saying, 'Well, if you can't give me a pay rise, surely you can give somebody a pay cut!'  That is effectively the way people think about their pay to a very large extent these days; in terms of relativities.  Of course, that means that it is impossible for the society as a whole to become happier by any amount of huge energy that people put into raising their incomes relative to other people; if people are happy according to their income relative to other people, there will always people who earn more and people who earn less, comparatively; the average relative income cannot rise in a society - it is impossible.  If somebody goes up, somebody else has to go down. 


That explains the fact, or certainly partly explains the fact that if you look at the measurements we have of happiness in the United States over the last sixty years, there is no upward trend, in spite of big increases in income over that period.  The same is essentially for Britain and also for West Germany.  Some European continental countries have gone up a bit and some have gone down, but it is a general truth that there is no huge change going on in happiness in the advanced world, in spite of the period of greatest economic growth ever experienced by mankind since the Second World War.


I conclude from this that an increase in the average absolute income for people in our country is not a particularly important objective for Government policy.  It certainly should not be the main objective for Government policy, as I think it was thought to be by this Government over the last ten years.  Let me just immediately point out, short term economic growth is a completely different issue to long term economic growth, which is what we are talking about here, if it means recovery from a recession.  Full employment is extraordinarily important for human happiness, and it is very important that we recover from the downturn which we are experiencing at the moment until we get back to full employment.  However, once we have got back to full employment, we should not continue to think that the most important thing for our nation is how rapidly the average absolute income can grow.


I would just like to refer at this point to an extraordinary economic fallacy, which I think should fail A Level students if they should ever commit it, but it is normally put out by most businessmen and probably the majority of politicians.  It is the idea that we have to be as productive as we possibly can be, because otherwise we cannot be competitive, and we must be competitive in order to pay our way in the world.  This is a completely incorrect statement, that, in order to be able to sell your goods at a competitive price, you have to be producing the maximum that you can possibly produce from each worker, because the price is of course dependent on how much the worker produces and on how much the worker is paid.  There is absolutely no reason why you should not decide to be a bit less productive than you otherwise might be in order to, say, have a more pleasant working life, or more time at home, sacrifice some productivity, sacrifice some income, for the sake of some other good.


I think that mankind has reached, let us say, over the last fifty years, a period which is completely unprecedented in the whole of human history in terms of comfort and living standards.  Subsistence ceases to be an issue, which it has been for the majority of people over most of human history.  We are not in a position where we can make ourselves a great deal happier by going on pushing up economic growth.  Economic growth will continue, because it is an expression of human creativity.  I am not against it at all.  But economic growth just means doing things better, and so we will always have economic growth, in my opinion.  Therefore we will continue to have an increasingly comfortable lifestyle, but it will not make a lot of difference to our happiness.  If we want to become happier, we have to pay attention to other factors that influence happiness, which are of course human relationships.


So if you look at the studies which explain why one person is happier than another, or indeed why one society is happier than another, you will find that the dominant influences are what the quality of their family life is: how happy are they with their family life, how happy are they with their work life, and how happy are they with the community in which they live with their friends and the strangers they meet in the street.


If you think of those three things, you can see at once some of the reasons why we have not been becoming happier, because family life has become more conflictual.  This is reflected in questions like, 'How happy are you with your marriage?'  In spite of the fact that it is easier to get out of a marriage, people are less happy with their marriages than they used to be. 


At work, job satisfaction more or less fluctuates to show any real trend, but there is an increase in stress at work, due to this pressure for higher productivity. 


If you look at community life, one of the easiest ways of measuring how happy people are is to ask them, 'Do you think most other people can be trusted?'  Which I think is a very interesting question.  Forty years ago, 60% of the British people would have said yes and 40% would have said no. But now it has fallen to 30% of people who say yes, and 70% say no, in this country, and the same change has happened in the United States of America.  I think this is a very significant change in our civilisation, in our culture, that we really need to take very seriously.  If you look at other countries, you will find many which are higher even than we ever were.  The Scandinavian countries are up in the 60s and 70s.  I think that this is an important clue to some of the things which we need to do in this country in order to become happier.  What I think differentiates these countries in which trust is high from others like ourselves is the extent to which it is simply considered good form to respect other people and to want to have a relationship of equality with them.  I am not talking, at the moment, about income distribution, but I am talking about the basic stance that you have towards other people when you interact with them. 


For example, the Readers Digest did this very interesting test: they left wallets in the street with addresses in them in ten of the major cities of the world.  In Stockholm, they were all sent back to the owners.  In London and New York, it was significantly less.  This type of test reflects the extent to which people identify with others, and the extent to which you empathise with how they would feel; the extent of mutuality in the society.  The fact that the countries tested are effectively equal in terms of their income is a sort of reflection of the fact that it is the equal income which is causing the trust.  Instead, it is some ideological or cultural factor which is causing the trust and causing the more equal income. 


There is a wonderful book, which I strongly recommend, by Richard Wilkinson and Kate Pickett, which just came out, which shows extraordinary correlations between income equality and anything good that you like to think of.  But I am not sure that it is causal; I think that, to a large extent, it reflects a common factor, which is very important: this desire to feel a sense of mutuality with your fellow citizens.  I would contrast that strongly with what I would call individualism, which is a culture in which you probably want to differentiate yourself from other people.  The nice way of defining individualism is that it is the idea that the goal of life is to make the most of yourself in some way, but of course, that very quickly becomes to do better than other people.  But, to going back to what I said before, if your aim is to have a society in which everybody is trying to do better than everybody else, there is no way they can achieve that, so it represents a lot of effort being devoted to something which cannot be changed, because it is a zero sum game - the amount of success relative to other people in a society is fixed.  I think it is tragic that we are, of course, in our schools and workplaces, all over the place, transmitting a value system in which the basic thing that people feel they ought to be doing is doing better than other people, and the society cannot deliver that.  So we need desperately to get away from a zero sum game set of goals to a positive sum set of goals for our society.




Government Policy


After what I have said so far, the question now is of what the Government should do, and I would like to go through four suggestions in response to this.


I would say that the first suggestion for the first real objective of a Government ought to be to create a society based on trust, or, in our context, to rebuild a society that is based on trust.  If I ask myself, 'What levers have we got?' I do not see many.  The only lever I see is the school system, where the society is captive for 11, 13 years or more.  Surely we can influence the values with which our young people grow up?  What we have to do in this area is to think of schools as playing at least as much and as important a role in building the character of the young people as they have in building their cognitive capacities and knowledge.  I think that it is absolutely essential that we re-define the role of schools so that they are thought to be there to build character.  We talked about this quite a lot in the Good Childhood Report, which is a more recent book which I had a hand in, called A Good Childhood, and we talked about this under two main headings: first, that the whole operation of the schools should be based on a very clear values system.  We know that, at the moment, one of the huge difficulties is that the parents do not share the value system of the school.  I was a school teacher when I was young, and the parents in general took the side of the school then, but now, the parents are perhaps more likely to take the side of the miscreant.  This is a terrific problem.  So we need a huge discussion between schools and the parents and the children as to what are the values which should be developed in the school.  There are schools that call themselves value schools, in which this is now basic to the whole way in which the school operates, and there is a value for the month, and a lot of the play and assemblies and so on is around exploring what do these values mean.  But unless we spend much more time exploring the meaning of values, we are not going to create the kind of society which we need.


The second general heading under which I would consider school-led upbringing concerns, of course, the individual building of life skills for individuals, which means understanding their own emotions, understanding other people's reactions, and so on.  There are quite well developed programmes for this, which have been tested out - random control trials etc. - to see whether these do actually make a difference to the mental health of young people, whether they are more or less prone to depression or bad behaviour, and so on, as a result of the programmes.  Many of these programmes have shown that they can make really substantial differences to the emotional life and the behaviour of young people.  Some of this thinking has influenced what the Government calls the SEAL Programme, Social and Emotional Aspects of Learning, but I think this needs to be developed further in terms of really well-tested and evidence-based programmes.  This would be a situation where you get not just a sort of philosophy, but something where you really are helping a teacher know how to teach these things.  These are unbelievably difficult things to teach, and I would certainly not want to try to myself.  It is not easy.  All kinds of different approaches have been tried, and some have been show to work and some not shown to work.  So one little campaign that I have is to get what is called personal, social and health education in schools, which would be one or two hours a week, turned into a specialist subject for which people are properly trained and are enabled to function by using really well-tested programmes, such as are used by people who get into problems with their mental health. 


So that is a society based on trust.  Then, I would say, the next big issue that government needs to address is to lessen the importance we attach to competition and to increase the importance we attach to cooperation in all aspects of our national life.  The Government plays a huge role in this, because, for example, consider how the Government is trying to improve the quality of our educational achievement, cognitive achievement of children.  The method that is currently being used is school league tables.  Of course, it sets up a system in which young people think, 'What is the purpose of education?  Well, it's to do as well as possible in the exams so that I'll do better than most other people and I'll get a good place somewhere.'  That is the object of the educational system as it is represented through the exam-based system of league tables; it is to do better than other people.  But this is a hopeless way of trying to bring young people to have a love of learning and a sense of curiosity and exploration in their lives.  The thought that the main point of education is to pass exams is awful!  Of course, it has got to this point because the Government has set up competition between schools, that puts pressure on the head, which the head passes onto the teachers, and the teachers then put pressure on the children.  I believe that these school league tables, in their present form, will begin to disappear in due course, I have got little doubt, and it would be a huge improvement when this does happen.


The next area where the Government has perhaps less influence, but it is imported it from the private sector into the public sector, is performance related pay.  The idea that you should, above all else, give the person a strong financial incentive to do their job properly is a dreadful idea.  It is, in many cases, futile, because it is based on the assumption that if you stiffen up one incentive, all the other incentives remain the same, but of course there is lots of evidence that if you stiffen up the financial incentive, then the other incentives become less and less important.  For instance, if you increase the attention given to the financial incentive, the motivation to do the job out of a sense of pride in your work is reduced. You can have very high financial incentives that may motivate people more, but they will have a poor effect on the quality and atmosphere in the workplace.  This is because, unless there is a very clearly measurable component of output attributable to the individual, they will very often, of course, involve ranking individuals against their colleagues, which produces tension, ill-feeling, disappointment and resentment at the workplace.


A third feature of this competition versus cooperation, which I think the Government, again, has some influence over, is the style of talk.  For instance, if you think about what the people who you most admire are described as, they are perhaps likely to be seen as people who turn everything upside down.  In this picture, security is a dangerous thing, and the great people are those who churn things up, reorganise everything, tell people that it is bad for them to feel secure.  I think this is awful.  The importation of fear into the workplace I think has been a very bad feature of a lot of the last ten or twenty years, for which the Government has a partial responsibility, because it has spoken the same language as the management consultants, which?  I won't say any more about management consultants!


So, that is the second thing governments should do in order to bring about a happier society.  The first is a society build on trust, and the second less competition and more cooperation.


The third thing, I would say, would concern support for parents, because, as I mentioned earlier, whether people are happy in their family life is the single most important thing in a happy society.  You might say this is nothing for a Government to get involved in, but I can tell you it is.  Here we should just think what the Government could do.  First, we could have, within the secondary school life skills curriculum some discussion of how children develop and how a good parent helps a child - what it is to be a parent, before you ever think of having a child.  Then, second, you have the child and you could be given free antenatal classes within the NHS, around the issues of parenting.  This would not just concern the physical care of a child, but the emotional side of it, and what it will do for the relationship between the two parents as well as the relationship between the parents and the child.  Third, if problems arise with the child, there should be really good child mental health services - that is my current hobbyhorse - but it is also very important if the parents are not getting on with each other. 


In the Good Childhood Report, we included a the results of a very interesting survey, where parents were asked how they felt about the statement: 'How parents get on with each other is very important in rearing of children.'  70% of children said that it was very important, but only 30% of parents said it was very important.  It is, in fact, very important to children how their parents get on, and that is why, if we want to protect children, which is one role for the state, this is an area where the state should, again, be offering free support for couples in tension with each other within the NHS.


Fourth, and the final issue: I think we should protect children against excessive commercial pressures - advertising and so on.  In Sweden, they ban advertising aimed at children under 12 - why shouldn't we?


That was just illustrations of how this line of thought would be different from what Government has been doing so far.  Is it a nanny society?  I do not think it would lead to an excessively interventionist society.  It is not compelling anybody to do anything.  It is helping them and supporting them in things which are really important.  I actually think that there is a lot of over-regulation in our society, and I think this is something which should be studied by happiness experts and is not.  So, one should not assume that if you think the Government should be creating the conditions for happiness it would be regulating increasingly more, because I think that creates a lot of unhappiness.  These are objective empirical issues, which do not lead necessarily to an encroachment of the state, but they do lead the state to take an interest in the things which are really important to people, and maybe a bit less interest in things which are much less important to people.  I think people do, to some extent, have to be protected against themselves.  I think the relaxation of the gambling laws is not a good thing at all, and if we look at what lay behind it, it was simply the result of focussing simply on GDP - the thought was that if it is good for the economy to relax gambling laws, then it would be good for society and so it would be something the government should do.  However, if we had not been considering things along GDP or economic grounds and looking towards wellbeing, it does not seem at all like the type of policy which a government would have passed.


But in conclusion I would like to add to all of this argument that I also think that this is an idea whose time has come.  Increasingly, impacts on happiness will be used as the main criteria for judging policies, and it will not be thought to be any less objective to look at those kinds of outcomes as outcomes in terms of pounds and pence.  It is a progressive agenda, because we will learn increasingly more in this field, and I think that it is time that we did admit that what matters in a society, is what ultimately matters, and this is what is going on inside of us, and if we could really create the conditions for inner contentment, we would have happier lives and a better society.  So let's go for it!






© Professor the Lord Layard, 30 April 2009


This event was on Thu, 30 Apr 2009

Lord Layard

Lord Layard

Lord Richard Layard is a labour economist, currently working as programme director of the Centre for Economic Performance at the London School of Economics. Previously...

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