'Happiness is ... " begins Professor Richard Layard. He pauses. I sit forward in my seat expectantly. Which definition will the government's happiness tsar pick? "A warm gun" (Lennon)?; "The greatest good" (Bentham)?; "The meaning and the purpose of life" (Aristotle)?; "The motive of every action of every man, even of those who hang themselves" (Pascal)?; "The greatest gift that I possess" (Dodd)?

This isn't a small matter. How he defines happiness is one of the most fascinating questions in British public life today, because Layard is quietly effecting a revolution in this miserable, materialistic, overworked country. A Labour peer since 2000, he has been able to influence first Blair's administration and then Brown's into making his happiness agenda government policy. His calls for cognitive behavioural therapy (CBT), for school lessons in emotional intelligence, and other allegedly happiness-causing reforms have been greeted warmly by education secretary Ed Balls, health secretary Alan Johnson, the health guideline-setting National Institute for Clinical Excellence and by local authorities up and down the country. Layard is founder director of the Centre for Economic Performance at the London School of Economics, and runs its Well-Being programme. He speaks cheerfully of how the word "well-being" now figures in job titles at government departments, how the new government policy includes commitments to well-being, how the Office for National Statistics is developing the measurement of well-being, how Ed Balls's Social and Emotional Aspects of Learning programme is devoted to making secondary school children focused on well-being. For Layard, you see, well-being is just another way of saying happiness.

But what is this thing called happiness? After a pause, he finishes his sentence thus: "Happiness is inversely related to income at higher levels of income because of the declining marginal utility of getting richer," says Layard. "Let me show you." He draws a graph: on the X axis is income per head, on the Y axis is average happiness. A curve ascends boldly and then tails off ignominiously. At the bottom of the curve, you will find countries such as Zimbabwe or Russia, where increases in national income per head will increase levels of happiness. "Think of economic growth in India - it has been associated with rises in average happiness." On the ignominious bit you will find a cluster of western countries, including our own, where such rises in income per head don't cheer us up one bit.