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Individual differences |
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Peter Richard Grenville Layard known as Richard Layard, (born 15 March 1934), is a British economist. He was founder-director in 1990 of, and is a current programme director at, the Centre for Economic Performance at the London School of Economics.
Layard received his education at King's College, Cambridge and at the London School of Economics. In his early career he was Senior Research Officer for the famous Robbins Committee on Higher Education. This committee's Robbins Report led to the massive expansion of UK university education in the 1960's and 1970's.
Apart from various academic positions he has held since the 1960s, Layard has worked as an advisor for numerous organizations, including government institutions in the United Kingdom and Russia.
In 1991, he married Molly Meacher, Baroness Meacher, they have two sons and two daughters.
Since 2000, Layard is a Labour life peer in the House of Lords known as Baron Layard, of Highgate.
Layard gained his reputation in economics working in the field of Labour economics (in particular jointly with Stephen Nickell). He advocated many of the policies which have characterised the New Labour government, The approach he takes is based on the idea of welfare-to-work, where social welfare payments are structured in a way that encourages (or forces) recipients back into the job market.
Layard now believes that unemployment as a problem has largely been "solved" (in the United Kingdom) and he has shifted his attention to what has come to be known as Happiness Economics. This branch of economic analysis starts from the argument that income is a bad approximation for happiness. Based on modern happiness research, he cites three factors that economists fail to take into consideration:
- Social comparisons: In contrast to what traditional economics predicts, happiness is derived from relative, not from absolute income. That is, if everyone gains purchasing power, some may still turn out unhappier if their position compared to others is worse. This effect may not turn economic growth into a zero sum game entirely, but it will likely diminish the benefits people draw from their hard work. In an economy where not only companies, but individuals are constantly forced to compete with each other, live and work are experienced as a rat race.
- Adaptation: People get used to higher income levels, their idea of a sufficient income grows with their income. If they fail to anticipate that effect, they will invest more time for work than is good for their happiness.
- Tastes change: Economists assume that individual preferences are constant.
From these observations, Layard concludes that taxes serve another purpose besides paying for public services (usually for public goods) and redistributing income. The third purpose is to counteract the cognitive bias that has people work more than is good for their happiness. That is, taxes should help citizens preserve a healthy work/life balance.
The depression report and proposals for service expansionEdit
Following on his work on happiness Layard moved his attention to the economic consequences of its opposite - depression. On the basis of his analysiis he recommended investment in a large number of publically funded clinics to to ease the impact of the disorder
- Richard Layard. Home page at the London School of Economics.
- Lionel Robbins Memorial Lecture Part 1 Very good - readable - introduction to Happiness Economics.
- Lionel Robbins Memorial Lecture Part 2
- Lionel Robbins Memorial Lecture Part 3
- Homepage of Bruno Frey. Another well-known economist working on Happiness Economics. Links to his research work.
- The Depression Report. LSE CEP page.
- There is no 'paradox of prosperity', Spiked (magazine), January 2007 Critique of happiness economics by Daniel Ben-Ami