The Easterlin Paradox is the result that most people are familiar with: more money makes you happier when you’re poor, but there are diminishing returns that are strong enough that more money doesn’t do much for the typical person in a developed country.
More recent research, from which the chart was drawn, shows that more money makes people happier everywhere – that’s the upward slope on all the little lines.
UPDATE: I posted this on Wednesday, but I had some trouble tracking down the Stevenson and Wolfers article that supports all this. I have it now and you can download it here. If you’re exploring further, be careful. What I found is that 1) this paper is cited differently so that it may appear that it is more than one paper (and you could waste your time), and 2) the server it is on at Wharton doesn’t download very cooperatively (so you could waste even more time). So I copied it to our server. It is a very long paper, but papers published in The Brookings Papers on Economic Activity tend to be very thorough and long, but also more accessible to students. So, if you’re interested, I’d give it a shot, but it not required.
P.S. I also have a hard copy if you want to make a copy.