EKONOMIJA SREĆE

This article analyses the relationship between material wellbeing and happiness. According to a neo-classical economic theory the main aim of human existence is maximisation of utility. Implicitly, this means that increase in material wellbeing leads to increase in happiness. The most recent research, however, challenges this attitude of a neo-classical economic theory. The main criticism points at an emphasis on the relationship between humans and objects, while neglects the relationship between humans. Empirical research has shown that increase in income from the level of poverty to the level of comfort increases the level of happiness. An increase in income from the level of comfort to the level of profligacy does not increase human happiness and in some cases can even decrease it. This is because humans measure their wealth in relative, not in absolute terms. Also, the law of diminishing returns is set in motion. The conclusion of the article is that moderation in wants and ambitions rather than unlimited increase in wealth and success in carrier can make humans happier.