Researchers at San Francisco State University found that people with personality traits that allow them to be nostalgic about the past have higher life satisfaction than those who exaggerate or mull over their failures.
They found that extroverted people had the best ability to do this whereas those with neurotic tendencies were the worst, the Daily Telegraph reported.
The study, according to the researchers, suggested that outlook rather than experience and fortune has a strong influence on overall happiness.
It also suggested that by changing certain traits, rather than a whole personality, individuals could greatly improve their happiness levels, they said.
"We found that highly extroverted people are happier with their lives because they tend to hold a positive, nostalgic view of the past and are less likely to have negative thoughts and regrets, said Professor Ryan Howell, a psychologist who led the study.
"People high on the neurotic scale essentially have the exact opposite view of the past and are less happy as a result."
For the study, the researchers looked at the personality traits and the relative happiness levels of 750 volunteers.
They used a standardised personality test to see how it relates to their outlook and life satisfaction.
The "Big Five" test assesses how extroverted, neurotic, open, conscientious and agreeable a person is by rating them on a scale for each personality trait.
Each volunteer was asked to describe how accurately each trait describes them on a one to nine scale with one being extremely inaccurate and nine being extremely accurate.
They were assessed about their "time perspective" -- a concept used to describe whether an individual is past, present or future orientated.
This was done by asking them to evaluate their past, present and future describing whether they felt they saw them in a positive or negative light. Finally they were tested for overall life satisfaction.
The authors suggested that "savouring" happy memories or "reframing" painful past experiences in a positive light could be effective ways for individuals to increase their life satisfaction.
Past studies have suggested that personality is a powerful predictor of a person`s life satisfaction. These latest findings help explain the reason behind this relationship.
"Personality traits influence how people look at the past, present and future and it is these different perspectives on time which drive a person`s happiness," Prof Howell said.
"Although it may be difficult to change your personality, you may be able to alter your view of time and boost your happiness," he added.