That can mean many things - for every year you work, you could theoretically retire one year earlier. You could now afford a car that doesn't cost more in maintenance than gas each year. You could now afford to double your extremely tight grocery budget and spend more money on healthier foods.
"Lifestyle" and "standard of living" are unquantifiable, which is why this is a compelling factoid, but the reality is that, ignoring inflation, a 10% increase in salary is a 10% increase in disposable income.
Now obviously if you have more disposable income than you need, a 10% increase doesn't mean much. If I was pulling down 200k I wouldn't move for 220k if I was happy where I was at, but if I was pulling down 40k I would move for 44k in a heartbeat.
That is if you live in a tax-free zone :)
I think it might better to think that if your income doubles you should only increase your lifestyle by 10% or so.
You should put as much of the extra income into investment , savings , getting clear of debt etc.
Happiness can be quantified, then there are things like the Human Development Index, Satisfaction With Life Index etc.
WP on measuring happiness: https://en.wikipedia.org/wiki/Happiness#Measures_of_happines...
More generally: Measures of emotion: A review <http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2756702/>;