Rat race
According to Layard, status competition is a 'rat race' that produces always someone who loses who becomes very unhappy because of his loss. Therefore, Layard pleads for taxation on all kinds of advertising that could lead to status competition. He also pleads for progressive taxation, which could decrease the race to achieve a higher income. So when the goverment wants to maximalize happiness, it has to discourage status competition by taxing advertising and by introducing higher taxes for higher incomes. But isn't it competition that leads to welfare? And if happiness is relative, isn't it competition that makes people perform better? And if so, doesn't discouragement of competition lead to economic downfall? It is clear that Layard thinks that economic growth is inferior to happiness growth, which he even confirmed in his book Happiness (2005).
Happiness is relative
According to Layard, a persons happiness depends on his relative income compared to that of the people in his or her social environment. Person A could become very unhappy when his neighbour, person B, buys a car that is more expensive than he could ever afford. When the government wants to maximalize happiness, person A can ask the government to prevent person B from buying that car, because it would make person A very unhappy. There is no doubt about the immorality of these kind of situations. It is not the prohibition of the expensive car that should increase the happiness of person A, but his right to the freedom to work for a similar car.
Leisure time
Layard divides the time in a persons life into two categories: labour time and leisure time. Because leisure time makes people happy, Layard pleads for a higher taxation on income to make leasure time cheaper when compared to labour time. But where labour leads to productivity and productivity leads to welfare, discouraging labour will lead to economic downfall, just like Layards previous argument. Besides, most forms of leisure time do have costs. Costs that could only be financed, indeed, by labour.
Conclusion
It is ironical that all policies that Layard pleads for to increase happiness lead to a very unhappy society. Happiness should be increased by higher taxes and discouragement of labour and competition. To introduce these kinds of policies, government should be extremely active in following peoples daily activities. More control is needed to see if people don't work too much. More control is needed to measure how happy people are. More control is needed to judge if advertisements don't increase status competition. More control is needed to detect undeclared employment. Therefore, quite rightly, Steele (2006) calls Layard a socialist utilitarian that tries to introduce his ideology by calling it social science. Of course, all these freedom limitations do not increase happiness. Veenhoven (2000) found that more correlates positively with more happiness.
Layards ideas, in which he wants to discourage labour and competition, are harmful to economic growth. Despite the fact that Layard thinks that economic growth is inferior to happiness growth, it is economic growth that léads to more happiness (Wolfers & Stevenson, 2008). Friedman (2005) also concluded that happiness can only be increased by economic growth because people judge their own happiness by comparing themselves to the generation before them.
Examining Layards view on happiness leads to the conclusion that only a free society without a big controlling government can lead to more happiness. Barrotta (2008) confirms this conclusion by claiming that only autonomous individuals have the knowledge to decide what makes them happy and that policy should therefore focus on individual freedom because freedom leads to happiness, like Veenhoven (2000) said too. It is not a coinsidence that the American Constitution gives a right to the pursuit of happiness instead of the right to happiness itself. Therefore, increasing happiness is not governmental task.
References:
Barrotta, P. (2008). Why economists should be unhappy with the economics of happiness. Economics and Philosophy, 24, 145-165.
Eberling, R.M. (2007). The new happiness economics: an Austrian critique. Beschikbaar:
http://mises.org/journals/scholar/ebeling2.pdf
Friedman, B.M. & Myers, J.J. (2005). The moral consequences of economic growth. Knopf.
Kahneman, D. & Tversky, A. (2000). Choices, values and frames. Cambridge University Press,
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Layard, R. (2005). Happiness: Lessons from a new science. Penguin Books.
Miller, A. (2008). A critique of positive psychology-or ‘the new science of happiness’. Journal of Philosophy Education, 42, 591-608.
Steele, G.R. (2006). Richard Layard’s happiness: Worn philosophy, weak psychology, wrong method and just plain bad economics! Political Quarterly, 77, 485-492.
Stevenson, B. & Wolfers, J. (2008). Economic growth and subjective well-being: Reassessing the Easterlin paradox. Brookings Paper on Economic Activity, 1, 1-102.
Veenhoven, R. (2000). Freedom and happiness. A comparative study in 46 nations in the early 1990’s. MIT Press, Cambridge, 257-288.
Von Mises, L. (1949). Human Action. Yale University Press. 621.