What explains the finding that people in high-income economies seem happier than people in low-income economies, but, over time, people in high-income economies do not seem to be any happier even if their country grows richer?
Economically, the best way to explain this fact is through the law of diminishing marginal utility. According to this law, as we get more and more of a particular thing, each thing that we get is worth less and less to us. Imagine that you are very hungry and you love hamburgers. The first hamburger will be worth a lot to you because you are so hungry. But each successive hamburger is worth less and less to you as you get full. Eventually, you will reach a point where the next hamburger is worthless to you and does not make you any more satisfied.
It is the same way with people and wealth, one can argue. Up to a point, more wealth means more happiness. But after a certain point, the extra wealth no longer increases happiness. The law of diminishing marginal utility has set in and happiness does not increase with further increases in wealth.