The degree of happiness depends on the difference between an individual's actual achievement and his or her expectations. An individual is not happy due to the fact that what he or she has possessed doesnot meet his or her expectations. This may explain why people at the countryside, though they possess much less materially, are much happier than those in the cities.
By the same token, we are not happy with others because we have high expectations of them than what they actually offer. This may explain why people are much more satisfied with their dogs, due to such a lower expectation. A simple trick such as hand shake can make people so happy.
I guess happiness resides on those individuals who have reasonable expectations about themselves and others as well.