Richard Layard, Baron Layard
Peter Richard Grenville Layard, Baron Layard FBA is a British labour economist, co-director of the Community Wellbeing programme at the Centre for Economic Performance at the London School of Economics, and co-editor of the World Happiness Report. Layard is an economist who wants public policy to be targeted at the wellbeing of the people. To this end he has written 6 books and some 40 articles.
His work on mental health, including publishing The Depression Report in 2006, led to the establishment of the Improving Access to Psychological Therapies programme in England.
Family and education
Peter Richard Grenville Layard is the son of John Layard and his wife Doris. He was educated at Eton College, where he was a King's scholar; at King's College, Cambridge; and at the London School of Economics.Work
Layard was Senior Research Officer for the Robbins Committee on Higher Education, and later developed a reputation in the economics of education, and in labour economics.Labour economics
In the 1980s he and his colleagues developed the Layard-Nickell model of how the level of unemployment is determined. This has become the most commonly used model by European economists and governments. It assigns an important role to how unemployed people are treated, and provides the intellectual basis for the welfare-to-work policies introduced in many countries, including Britain, Germany and Denmark.The basic message is in Unemployment: Macroeconomic Performance and the Labour Market. This was first published in 1991, and a second edition in 2005 showed how well the model predicted the development of unemployment in different countries over the years between 1991 and 2003.
Drawing on this work, Layard was active in the policy field on unemployment, both in the UK and outside. In 1985 he founded the Employment Institute to press for welfare to work policies, and his proposals were largely implemented in 2007 in the Labour Party’s New Deal policies for young people, and then older adults. His influence also spread to Europe. In the 1980s he was Chairman of the European Commission’s Macroeconomic Policy Group and in the 1990s the Hartz reforms in Germany were influenced by his work. From 1997 to 2001 he was a part-time consultant to the British government on welfare-to-work and vocational education.
On inequality, his work shows the key role of education in influencing the income of individuals and families. He has been a strong advocate of better vocational education for less academic youngsters. The case he made led to major increases in apprenticeship and the which guaranteed access to an apprenticeship for qualified applicants.
He advocated many of the policies which characterised the New Labour government, particularly the New Deal, partly by founding the at the London School of Economics. He supported the idea of welfare-to-work, where social welfare payments are structured in a way that encourages recipients back into the job market.
As well as academic positions, Layard worked as an advisor for numerous organisations, including government institutions in the United Kingdom and Russia.
In 1990 he was founder-director of the at the London School of Economics where he is presently a programme director. The Centre has become one of Europe's leading research institutes
Happiness and wellbeing
Layard became active in the study of what has since come to be known as happiness economics. This branch of economic analysis starts from the argument that income is a bad approximation for happiness. He has always believed, as in the 18th Century Enlightenment, that societies should be judged by the happiness of the people. And since the 1970s he has urged fellow economists to return to the idea that public policy should maximise a social welfare function depending on the distribution of happiness. In 1980 he wrote "the first paper to focus specifically on the policy implications of ". In 2005 he wrote , which was published in 20 languages.In his early research on wellbeing, he focused heavily on the role of relative income as a determinant of wellbeing. He showed how in many countries the income of one’s reference group reduces one’s own happiness – and he showed the implications of this for tax policy and the measurement of the “excess burden” of taxes. He also studied the form of the income-happiness relationship. This found that happiness was approximately linear in log income.
He then turned to the whole range of influences on wellbeing as it develops over the life cycle, using longitudinal data from 4 countries. This and more fully in a book called . It revealed, among other things, the huge impact of schools and teachers upon subsequent wellbeing, and the huge role that the independent variation of mental health plays in explaining the variance of wellbeing.
Mental health
Given this, he argued strongly for more attention to mental health, both as a key factor affecting wellbeing, but also as an important factor of production affecting productivity and employment. He argued that the economics is quite different for mental and physical health. Mental illness is mainly a disease of working age, with huge economic costs, while physical illness is mainly a disease of retirement. Thus, inexpensive treatments for mental illness will pay for themselves in reduced welfare and increased taxes.Working together with the distinguished psychologist David M. Clark in 2007 resulted in the development of Improving Access to Psychological Therapies, an initiative to improve access to psychological therapies in the United Kingdom. It established a new psychological therapy service for anxiety disorders and depression. This was established in 2008 and now treats over 700,000 people a year, of whom half recover within an average of 8 sessions of treatment. The programme has paid for itself and has been copied in 5 other countries. In a series of co-authored articles he showed how psychological therapy affected employment and thus paid for itself in savings on welfare benefits and lost taxes. This work also showed what factors affected the recovery rates in different local services. This led to significant improvements in recovery rates. He summarised his analysis on mental health in a book called .
He also helped develop a major programme for mental health prevention in schools. This was a weekly 4-year curriculum in life skills for pupils aged 11-15 called . It was highly manualised and when in 32 schools, was found to be highly cost-effective.
Wellbeing science
Meantime in 2012 he became a founder co-editor of the annual World Happiness Report in which he has written numerous articles. In one of these he published the a person could expect to experience if born in different areas of the world. His central aim has always been to develop wellbeing science to the point where it can provide key evidence for the selection of all policy priorities. In 2014 he laid out the framework for this approach in one chapter of the report , chaired by Gus O’Donnell. But the crucial need was to bring together the evidence on all the factors which affect wellbeing. In 2023 he did this in the first comprehensive textbook on wellbeing – . This aims to persuade policy-makers that wellbeing is a feasible goal for them, and also to develop the cadre of trained analysts to help them target it. As the book makes clear, the aim is not to supplant traditional cost-benefit analysis, but to supplement it in the myriad of cases where revealed preference can provide no plausible evidence, but direct measures of wellbeing can. Layard’s current research is focused on showing how this approach can illuminate public priorities through worked examples of benefit/cost ratios across the whole field of policy.Wellbeing policy
Layard’s policy work has reached far beyond mental health. He has been a major leader in the effort to put wellbeing at the centre of the movement to go “Beyond GDP”. In 2010 he persuaded the British Prime Minister David Cameron that wellbeing would be a major government objective, and be regularly measured in the national statistics. The measures were then recommended by the OECD to all member countries. More recently his team have been influential in getting evidence on subjective wellbeing officially accepted in the on subjective evaluations. Internationally, he chaired the World Economic Forum Global Agenda Council on Health and Wellbeing, which in 2012 launched a report at Davos “”.
Since then the World Happiness Report has provided a stream of evidence for policy-makers on the ways in which they can improve the wellbeing of their people. Layard summarised more of the evidence on what can be done in each sphere of life in . Layard has co-founded two movements to promote the wellbeing of society. One, called , is a popular movement for personal change to produce a happier world. It now has 600,000 members and 6,000 trained volunteers providing courses and leading groups. The other is the , a top-down movement targeted at decision-makers.
In 2024 Layard co-authored a report, . It argues that public money should be spent on those policies which produce the most wellbeing, and therefore the best policies are those which produce the most wellbeing for each pound they cost the government. It is hoped that this approach will be adopted for the 2025 Spending Review.
Subsequent books have included The Good Childhood, Thrive, Can We Be Happier?: Evidence and Ethics, and Wellbeing: Science and Policy.