Money and happiness The evidence is clear: our wellbeing depends on cooperation and the public good, not personal enrichment
Polly Toynbee Friday March 7, 2003 The Guardian When God died, GDP took over and economists became the new high priests. That has been the story of the last century, with prophets from Hayek to Keynes. The "dismal science" - economics - rules our lives and politics. So when one of the wizards of economics breaks ranks spectacularly and rips away the curtain of his own profession's mystique, it is time to take notice. Lord (Richard) Layard, the LSE's director of the centre for economic performance, has this week delivered three startling lectures which question the supremacy of economics. It doesn't work. Economies grow, GDP swells, but once above abject poverty, it makes no difference to citizens' well-being. What is all this extra money for if it is now proved beyond doubt not to deliver greater happiness, nationally or individually? Happiness has not risen in western nations in the last 50 years, despite massive increases in wealth. This sounds like the stuff of vicars, Greens and prophets of doom with sandwich boards in Oxford Street. Yes, we've considered the lilies of the field while getting on down to Dixons, humming "money can't buy me love" all the way to the bank. Retail therapy feels good. So most of serious politics, and thus our national life, revolves around cash, its getting and spending. Layard is not the first to say this: there is a growing new scientific movement studying happiness. Daniel Kahneman, the winner of this year's Nobel Prize for economics - yes, economics - is best known for his work on hedonic psychology. Suddenly the big question is being asked by those who spent their lives on making and measuring money: what's it all for? For doubters, he offers a wealth of hard scientific evidence. Neuroscience has backed up social and psychological surveys: brain scans now prove that people's reported happiness levels are remarkably accurate, as easy to measure as decibels of noise. And people are no happier than they were. Money does matter in various ways. People earning under around £10,000 are measurably, permanently happier when paid more. It matters when people of any income feel a drop from what they have become used to. But above all, money makes people unhappy when they compare their own income with others'. Richer people are happier - but not because of the absolute size of their wealth, but because they have more than other people. But the wider the wealth gap, the worse it harms the rest. Rivalry in income makes those left behind more miserable that it confers extra happiness on the winners. In which case, he suggests, the winners deserve to be taxed more on the "polluter pays" principle: the rich are causing measurable unhappiness by getting out too far ahead of the rest, without doing themselves much good. In pursuit of money, working ever harder, we are, says Layard, on a "hedonic treadmill" - a phrase that resonates with most of us. Right across Europe people report more stress, harder work, greater fear of insecurity, chasing elusive gains. The seven key factors now scientifically established to affect happiness most are: mental health, satisfying and secure work, a secure and loving private life, a safe community, freedom and moral values. If politicians were to absorb this message - he delivered a version of this at the Smith Institute inside No 11 last week - the political implications are devastating. Virtually everything politicians can promise with any degree of certainty, depends on money - more growth, higher GDP, more things. Once they leave the terra firma of hard economics, they are in alarming territory. Politicians are not priests or moral guides: since they are now treated with (unjustified) contempt, they areunlikely to assume the mantle of the nation's happiness gurus. But imagine if they abandoned all other targets and adopted just the one - to increase the sum of national felicity. Budget day would no longer be the big event, it would instead be replaced with hedonic measurement day. Where would they find quick wins? Layard suggests a great many. As an employment economist, (chief architect of Labour's New Deal), at work he calls for gentler management, less downsizing and squeezing of labour, more security of tenure. Though he has recently called for Europeans to be tougher on pushing people into work, since unemployment is a prime source of despair, once in work he supports European-style employment protection, treating workers better. He decries calls for more "labour mobility", which has destroyed secure communities and separated families, contributing greatly to unhappiness. "As we get richer, we could afford less unpleasant working conditions." He is at his most caustic on mental health. Depression is largely curable with drugs and therapy, but only a quarter of people get treatment. Mental illness causes half of Britain's disability, but claims just 12% of resources. Shifting money within the NHS would be a hedonic quick win. Education also makes for happiness. He has more examples aplenty, and ends with a call for common values, more trust. Layard is hugely and wonderfully optimistic: his lectures are heady, even hedonic, material. He is also strangely apolitical. There will be those who shrug and say this research just goes to show that human nature is a constant, never changes, people have always been happy or unhappy to the same degree. Nothing works. Governments certainly don't deliver bliss, so let us all pursue our own private paths as best we can. These people are called conservatives. Optimists - or progressives like Layard, will see in this research a far better road map to happiness, which lies in the common good. Happiness is easier to find in collective things than in the short-lived pleasures of shopping. Here is affirmed what the left always knew. But what are beleaguered, well-intentioned Labour politicians to make of this, confronted on every side by the shrill cries of the right and its press against any tax rises, against all collective goods as "waste"? Business bellows for more "flexibility" which destroys trust and se curity at work, for fewer rights, more competition, less cooperation. Yet in Layard's spiritual ending, there is common ground in his call for public morality, self-sacrifice for the greater good, excoriating the selfishness of individualism. He is Old Testament stern about the culture of endlessly pursuing personal pleasure, regardless of the needs of others. He refers nostalgically to wartime, when citizens accepted a drop in personal gratification for common purpose, something so often praised by conservatives and yet resisted with every fibre in peacetime. Layard is a necessary guru for our times, with a new moral language for some good old sentiments. · Richard Layard is currently writing a book on economics and happiness. His lectures can be found at cep.lse.ac.uk · [EMAIL PROTECTED]
