The price of happiness

12 March 2005

Petronella Wyatt talks to Richard Layard, who believes that higher taxation can reduce envy and make us all happier

I stand in the lobby of the House of Lords, awaiting the arrival of this miracle-maker. What will his appearance be? Exalted? Serene? Will he be beaming? When he turns up he is a slightly surprising-looking happiness prophet. He has short grey hair, stern spectacles and a long nose that gives him an Eeyore-ish expression. He shakes my hand gravely and says, ‘We have to wait for an interview room, I’m afraid. They are all booked. Let’s go to the bar and have coffee.’ But the Lords bar is not serving coffee and the acoustics are appalling. ‘Oh dear,’ he says, mournfully. But his natural optimism soon returns and he decides to see if an interview room is free just in case. It is.

What prompted you to take on such a difficult subject? I ask. ‘I’ve always been interested in happiness,’ he replies. ‘I believe everyone can be happy.’ But surely it is more sensible to accept that suffering is an inevitable part of life? Layard disagrees. His doctrine, which is being taken increasingly seriously by the government, includes the belief that we make ourselves unhappy by comparing our socio-economic positions with other people’s. Because of the race to keep up with the Joneses we are no happier than we were 50 years ago, though our average incomes have doubled. Layard’s solution to this is to use taxation to reduce inequality.

I agree that the rat race is not the most desirable of situations and that we do indeed cause ourselves misery by envying our neighbours. But surely past experiments have shown that enforcing equality of income isn’t the solution. Layard’s big thing is taxation. He is convinced that paying taxes makes us really happy and that if we paid more we would be even happier. ‘Taxation is not really an infringement of freedom, you see. It creates freedom,’ he says.

Although some of what Layard says makes sense, this does not. I remind him of Britain in the 1970s, when the rich left the country and the ‘brain drain’ occurred. And what of aspirational people who hope one day to earn decent money, but don’t want to give a third of it to the tax man? Why else do so many of us go to a great deal of trouble to pay less tax by legal means? Sweden has a high rate of tax and an even higher suicide rate. Surely if people were happy to pay high taxes, Layard’s own party would be advocating it?

‘It should. You see, paying taxes and redistribution is a way of helping other people. People who help others are happier than those who just pursue self-realisation,’ he says. ‘But Richard,’ I argue. ‘No one is truly altruistic. Humans are biologically conditioned to get ahead and achieve things for themselves. How can you suppress the most natural of human urges — even if it is to be deplored?’ He concedes the point. ‘Yes, we are biologically conditioned to have the competitive gene. But I think that the desire to feel good is even stronger.’