Middle class and happy for $120k
But money has diminishing returns -- like just about everything else. Satisfaction rises with income until about $75,000 (or perhaps as high as $120,000). After that, researchers have had trouble proving that more money makes that much of a difference. Other factors -- like marriage quality and health -- become more relatively important than money. It might be the case that richer people use their money to move to richer areas, where they no longer feel rich. Non-economists might chalk this up to the "keeping up with the Jones'" principle.
3a) The diminishing-returns principle is true for entire countries, too... The "Easterlin Paradox" suggests that once a developed country passes a threshold average income, more growth doesn't increase average reported happiness.
3b) ... but there might be exceptions -- or the whole theory might be wrong!. Betsey Stevenson and Justin Wolfers, disagreeing with Easterlin in a widely-read paper, have showed that some countries, such as Japan and Italy, have clearly rising levels of well-being alongside rising GDP.
4) Income inequality reduces well-being, and higher public spending increases well-being. These conclusions have been reached many times ... and called into question many times. Most interestingly, "perceived social mobility" might mitigate the effects of income inequality. If people think they can move up the income ladder, they're willing to tolerate a larger equality gap.