The age-old question of whether money can make a person happy is the topic of a recent series of studies by Nobel-prize winning psychologist, Daniel Kahneman and his colleagues. Using a large Gallup survey, they conclude that happiness increases along with income - but only up to a point. Happiness rises up to an annual income of $75,000, but there is no further increase in beyond that point. Satisfaction with life, however, continues to rise with income.
The researchers also explored both the "cognitive" (satisfaction with life) and the "emotional" side of happiness - a composite of reported happiness, enjoyment, and frequent smiling and laughter. Although emotional happiness rises up to the $75K mark (which is near the average annual income, but only 1/3 of US households make more than $75K), there are other factors that are better predictors of emotional happiness, such as being in good health, or not reporting loneliness.
On the flip side, the research explored feelings of worry and sadness (they called this "blue affect") and reported stress. The researchers comment that beyond an income of $75,000, "higher income is neither the road to experienced happiness nor the road to the relief of unhappiness or stress..."