An exclusive interview with Lord Richard Layard about Happiness & Income

The Easterlin paradox perspective

1.Could you elaborate on your perspective regarding the Easterlin Paradox, which suggests that beyond a certain income level, increases in GDP do not correlate with increased happiness?

• The Easterlin Paradox shows that, within a country, richer people are generally happier than poorer ones. This pattern repeats itself consistently. So, you might expect that as a country becomes wealthier, its citizens would become happier too.

  But in practice, that’s not always the case. For example, in the United States, even though the country has become much richer since the 1950s, overall happiness hasn’t really increased.

  In poorer countries, the story is different — as incomes rise, people generally report higher levels of happiness. But in wealthier nations, it’s more complicated. Here, it’s not just income that matters, but also factors like personal freedom, social support, and trust in institutions.

Source: Private archive

Personal definition of happiness

2.How do you personally define happiness, and what experiences or factors have most significantly influenced your own sense of well-being?

• At its core, happiness is about feeling good. It’s a natural part of human experience, a bit like temperature — it goes up and down. Sometimes you feel better, sometimes worse. But if you take the average of those ups and downs and ask someone, “How satisfied are you with your life overall?” — that’s the main question we use in our well-being research. In fact, in our book Well-Being: Science and Policy, we relied on this definition consistently throughout.

From my perspective, three factors really stand out:

1.Personal relationships – For me, my wife comes first, and I think for most people close relationships are the single most important source of happiness and life satisfaction.

2.Meaningful work – Personally, I find that contributing something useful and beneficial to others is deeply rewarding. And research shows that having a sense of purpose at work plays a huge role in overall well-being.

3.Leisure and hobbies – Everyone should have an activity they truly enjoy, something that makes them feel alive. For me, that’s tennis. It’s not just exercise, it’s a passion that brings joy and balance to my life.

Factors Influencing Unhappiness

3.What are the main drivers of unhappiness?

• One of the biggest factors behind unhappiness is how people compare their income to others. It’s not just about absolute wealth — it’s about relative position. If everyone gets richer at the same rate, no one’s relative income improves, which helps explain the Easterlin Paradox.

  Research shows that the income of someone’s reference group — the people they compare themselves with — can negatively affect their well-being. This is why overall economic growth doesn’t always translate into higher national happiness. To address this, policies and interventions should focus not only on income, but also on social support, equality, and quality of life, which have a stronger and more lasting impact on happiness.

Policy Implications

4.How can governments integrate well-being metrics into public policy to enhance societal happiness? Are there specific policies or best practices you advocate for?

• Governments, schools, and employers can all play a big role in improving societal happiness.

  For governments, a key focus should be healthcare system including mental health care — both treatment and prevention. Many people who need effective psychological therapies don’t currently have access to them.

  Schools can help children develop emotional skills, healthy values, and strong relationships, which are essential for long-term well-being.

  Employers also have a crucial role, especially how managers treat their teams. Supportive work environments significantly impact life satisfaction.

  Policy decisions should focus on spending that truly improves people’s happiness. Well-being metrics can guide cost-benefit analysis, helping governments prioritize initiatives that make the biggest difference in quality of life. The British government is already moving in this direction, measuring the impact of policies on happiness and well-being.

Mental Health and Well-being

5.You have emphasized the importance of mental health in overall well-being. Could you discuss the role of mental health initiatives in promoting happiness?

• In many countries, mental health is often neglected by public health systems unless someone is severely ill. Most people with anxiety or depression only receive medication, which isn’t effective for many cases.

  In Britain, we created a dedicated psychological therapy service for anxiety and depression below the severe level, called NHS Talking Therapists. It treats around 700,000 people a year, with 50% recovering in about eight sessions.

  This service not only improves well-being and happiness, but also saves money: people return to work sooner, reducing sickness benefits, and physically ill patients with mental health support consume less healthcare overall.

  The success of this program has inspired seven other countries to adopt similar models, showing how targeted mental health initiatives can make a real difference for society. So, I don’t know whether there’s anyone in Serbia interested, but I’ll just mention that.

Cultural and Social Factors

6.How do cultural and social dynamics influence happiness, and what can be learned from cross-country comparisons? What recommendations would you have for developing countries like Serbia to enhance the well-being of their populations?

• As you may know, I am a co-editor of the World Happiness Report, and each year my colleague John Helliwell authors the second chapter, which examines how average happiness in a country is influenced not only by income and health, but also by factors such as freedom, corruption, social support, pro-social behavior, and, when available, measures of trust within society. Trust, in particular, is crucial—whether people feel they can rely on others around them. This is one of the key reasons why Scandinavian countries consistently rank at the top: they have exceptionally high levels of interpersonal trust and a strong sense of mutual concern. For example, in experiments where wallets are dropped on the street, nearly all are returned in Scandinavia, compared to only about 10% in some other countries. Their overall living standards are not necessarily higher than in the U.S. or Canada, but the difference lies in the distribution of wealth and the ethos of solidarity.

  Another important but often underexplored cultural dimension is people’s life goals. If the primary aim is to contribute to the well-being of others, society functions differently than when the focus is solely on personal gain. This orientation directly affects whether trust can flourish. That is also why we founded the movement Action for Happiness, where members commit to living in a way that maximizes happiness for others as well as themselves.

Future Research Directions & AI influence on happiness

7. What areas within happiness economics still need more exploration? And how does artificial intelligence affect happiness in societies?

• Artificial intelligence has great potential to make life easier, but it can also disrupt the labor market, especially for people in routine jobs. That’s why its development and use should be approached with care.

As for the future of happiness research, a major step forward would be to develop reliable brain-based measures of happiness that could be compared across countries. While neuroscience is moving in that direction, we are not there yet. From a policy perspective, what we need most are large-scale experiments where happiness is included as an outcome. My key recommendation to social scientists and governments is simple: whenever you test a new policy or intervention, make sure to measure its impact on happiness.