Denmark is the happiest place on Earth?

Dani Rodrik’s weblog: Poor and happy?

My background knowledge of happiness used to be that research shows there’s no strong connection between happiness and wealth, that even dirt-poor people were statistically as happy as anybody else, and this surprising information because my own conventional wisdom. Recently I saw statistics that poor people are indeed unhappy, but once you get about US$10,000 per year, happiness flattens out. Here’s some data that’s even more precise, and it suggests that we have gone full circle back to the idea that, the more money you have, the happier you are.

Here's Dani Rodrik's writeup of the paper. My biggest question, before reading the report, is how distorting is it to group people into income vs happiness by country, instead of in smaller units?