If you live in a "developed" country, and are not facing hunger and physical poverty, having more income will not make you happier, according to economist Richard Layard.
In his book Happiness: Lessons From a New Science (New York: Penguin Press, 2005), Layard observes that what matters is comparative wealth. "When people become richer compared with other people, they become happier. But when whole societies have become richer, they have not become happier--at least in the West".
Layard, whose research on well-being is introduced in the Suite 101 article The Pursuit of Happiness , considers that additional income is addictive. Given that people are adaptable and status-conscious, more money increases happiness less as people become richer. And an increasing income gap makes people with less significantly more miserable.
A New Approach to Productivity
This finding could have radical implications for a society wanting to pursue well-being as an objective. Layard argues that in doing cost-benefit analysis on proposed policies, governments should "assign a lower value to monetary gains and losses accruing to the rich, and a higher value to equal gains and losses accruing to the poor." When coupled with his views on the importance of work-life balance, this means that taxes encouraging people to work less are actually "corrective", a good thing. "If we make taxes commensurate to the damage that an individual does to others when he earns more, then he will only work harder if there is a true net benefit to society as a whole. It is efficient to discourage work effort that makes society worse off."
Measuring National Welfare
In essence the objective of a society according to this vision is happiness rather than dynamic growth and change, and Gross National Product would not be the only indicator of national welfare. In fact, governments and non-governmental organisations around the world, faced with assessing the impact of "externalities" such as air pollution, are developing broader-based indicators of social progress. (See for example, the work towards a Genuine Progress Index surveyed in the Suite 101 article Costing Quality of Life.)
In addition to economic policy, changes can be made in communities and workplaces that may significantly improve happiness. These improvements relate to the value placed by people on stability and family relationships, and on their need for respect. There are also implications for global development and the relationship between nations. Some of these strategies are considered in the Suite 101 companion piece, Twelve Steps Towards Happiness.
