Abstract: The relationship between income and happiness has been controversial. This article analyzed the existing research results, and then summed up a curvilinear relationship between income and happiness: at low income levels, increase in income will lead to significant increase in the level of happiness, once income comes up to a certain level which can meet people’s basic needs, its positive effect on happiness will be weakened by psychological factors such as social comparison, adaptation and aspirations. Based on this relationship, both social humanistic care and fair adjustment, especially the social system design, and personal strive and psychological adjustment are needed to enhance the Chinese people’s happiness.

Key words: income, happiness, social comparison, adaption, aspirations