Indeed.
This is how the cycle perpetuates itself.
In addition to all the other flaws with our reasoning, we are also lousy judges of our own happiness.
That being said, there are certainly degrees of human misery, with some being markedly less miserable than others, but the objective evidence would suggest that we are all, in fact, quite unhappy most of the time.
This tough pill to swallow is one of the many ways in which our biology has tricked us into perpetuating the species beyond its typical limits.