Jump to content

Richard Layard, Baron Layard

From Wikipedia, the free encyclopedia
This is an old revision of this page, as edited by 158.143.50.14 (talk) at 12:34, 24 July 2006 (→Work). The present address (URL) is a permanent link to this revision, which may differ significantly from the current revision.

Richard Layard (born March 15, 1934) is a British economist and since 1990 director of 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. Apart from various academic positions he held since the 1960s, Layard has worked as an advisor for numerous organizations, including government institutions in the United Kingdom and Russia.

Since 2000, Layard is a Labour member of the House of Lords as Lord Layard, of Highgate.

Work

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, partly by founding the influential Centre for Economic Performance at the London School of Economics. 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 be constant. And bad tastes may hurt happiness.

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.

Retrieved from "https://en.wikipedia.org/w/index.php?title=Richard_Layard,_Baron_Layard&oldid=65541889"