This graph cited by Mahalanobis deserves closer scrutiny. Several commentators have concluded that happiness is not explained by income because the gap between Republicans and Democrats is 10% or so at each income level. Much information is obscured by this simplistic conclusion, and by using a grouped column chart.
In fact, the inherent symmetry in this observation has been sidestepped. The gap between the rich and the poor is also constant for each party affiliation. In other words, rich Americans are happier by the same degree whether they are Republicans or Democrats. What's more, the gap in happiness between the rich and the poor is about 20%, twice that between the parties.
This observation is more clearly depicted in the line chart shown on the right. The gap between the top and bottom lines is about 20% throughout the chart. By contrast, the difference between R and D is about 10% (focus on first segments of the blue lines). Thus, the story is more about income groups than about parties.
Actually, the most interesting feature in this data concerns the $30K-50K income group (the green line). The green line is the only one that is not roughly parallel to the other lines. Republicans and Independents in this income range behave like the next richer group while Democrats behave like the next poorer group. Could it be that the cutoff point for defining this income group hasn't been selected correctly? Indeed, how is this choice made?
Technical note: equal gap for each income level indicates no income-party interaction effect, which leads to the symmetry interpretation. No interaction effect does not preclude strong income effect and strong party effect. We show that the income effect is about double that of party.