It depends on what kind of happiness you're talking about. Is it your day to day mood? Or longer, deeper fulfillment about where your life is going.
The first kind has been touched on well by other answers to this question. The longer-running happiness is a little harder to nail down. A lot of people love to say that money doesn't buy happiness, except that some research done by Princeton back in 2010 actually suggested it that it does.
Apparently, folks making $75,000 a year hit a high level of documented happiness because they were free from stress of bills and debt but also able to afford material wants, travel, experiences and be able to tend to the needs and safety of their loved ones. What made the $75,000 point interesting was that happiness didn't noticeably rise with higher incomes after that, at least not enough to be significant.
A later study done more recently looked into this more and actually suggests that the new "sweet spot" is between $50,000 and $75,000. Individuals in this range have enough money to live the life they want, but many professionals making more than that annually are in highly stressful positions and/or putting in so many hours they can't enjoy life.
Living in a place with a low cost of living lowers the income thresholds, because the real key is lots of disposable income and safety net.