It's interesting--I was just having a conversation with my sister a week ago about this very topic. Sure, you have to adjust according to local CoL.
We were driving down the road in her '01 Accord, next to a nice, shiny Maserati. My sister made the comment that "he has to obey the same speed limits as us!" despite the expense of his car. (When I first got in her car, I sincerely complimented it--after all, it has leather seats, a moon roof, 6-disc CD player, etc. Far nicer than my '95 Corolla with cloth seats, peeling paint, and a leaky output shaft!)
The conclusion I came to is this: Once basic needs have been met (food, clothing, shelter, transportation), you get into the world of "wants" and "nice to haves." And in many cases, those desires are driven not by what would actually bring us happiness, but by what we see around us. We see people who have nicer cars, bigger houses, newer cell phones, expensive vacations, etc and appear to be happy. And we make the illogical conclusion that having nice things causes happiness, and so we must have nicer things to be happy.
It has really made me question what *really* brings me happiness.