The way to make yourself really miserable is to compare your salary to that of the most overpaid, incompetent peer or superior. The way to make yourself feel really good is to compare your salary to others at the company who are even more undervalued than you are. 99% of people opt to make themselves miserable rather than feel good.
When people are asked "Are you happy?" they have to think in comparative terms (even Bruno Frey says this). X says he is happy because he looks at his situation compared with other people he knows (including himself in the past) and decides he is in relatively good shape.
I'd like to hear how Arnold reconciles his two statements. If all happiness is "comparative," then doesn't comparing yourself to under-valued people merely induce a change in how happy you call yourself, rather than a change in how happy you are? In other words, on Arnold's view, changing your comparison group can only change your nominal happiness, not your real happiness.
To put my cards on the table, my view is that happiness is only partially comparative. "Happy" is like "hungry" rather than "tall." An amnesiac on a desert island can't know if he's tall without anyone to compare himself to. But he can definitely know if he's hungry. And I say he can also know if he's happy.