This is a quote often attributed to Abraham Lincoln, although the origin of this quote is disputed. make up your mind = make a decision A simpler way of saying the same thing = Most people are as happy as they decide to be.

To "make up something" can means to prepare something. 1) "Make up your bed!" Is a command telling you to make your bed proper and neat when you get up in the morning. 2) "Make up some mortar, we're going to build a brick wall." Is a command to prepare a batch of mortar. 3) "Make up your mind" means to make a decision.

This is a weird, old fashioned version of the more common "make up your mind." This is an idiom that means to decide. If someone needs to make a choice, you can tell them to make up their mind. So, it means most folks are as happy as they decide to be.