COMMENTS
Layard's argument is strong and interesting and the following remarks, about his selection of research results and about the logic of his proposals, seem to be appropriate.
Selection of Research Results
• In his selection of research results, Layard is inspired by his Labor background and in some points his selection is somewhat selective, His list of seven important factors for happiness is not clearly related to empirical research.
• Layard's assessment of the importance of social comparison is not very precise. He admits that people care more about absolute income than about relative income but he still puts a lot of weight on social comparison.
• Layard seems to overestimate this importance of social comparison for happiness. Social comparison is important but cannot really explain differences in happiness within nations and between nations. Differences in objective circumstances like wealth, freedom and institutional developments are more influential. One reason is that people can only compare themselves in a few domains of life like financial situation and work. In important domains of life like community and social relations, marriage, leisure and physical and mental health, such comparison is difficult or even impossible in practice.
• Perhaps as a consequence Layard seems to overestimate the negative effect of income-inequality on happiness. There is no significant correlation between income inequality in nations and inequality in happiness. In rich nations this is probably due to the fact that governments apply income policies, including social security and many transfers and subsidies. This has made the availability of important goods and services, like food, education and medical care, less dependent on personal income (Ott, 2005).