Promoting self-esteem can be useful within limits. Telling kids that they all matter and are worth something is good; telling them they're all exceptional and deserve a trophy just for showing up is not. Problem is most self-esteem programs wind up veering toward the latter.
I like IP's parents' (also my parents') approach - tell the kid they have great potential, and praise them when they do well. Give more tangible rewards intermittently (rewarding behavior every time is counterproductive). But don't act as if they are already that great person that they have the potential to be.
I can't see the happiness in being mundane. Now what kind of conclusion can you draw from that? I imagine it will have something to do with narcissism.
If no one could be happy being mundane, almost no one could be happy. The key is, is it mundane to you? I'd guess for your friends, it's not, at least not consciously. No matter what the nature of your life is, if you enjoy it, it's worthwhile.
There's nothing wrong or narcissistic with wanting better for yourself, but your friends may not share this perspective - once you have a wife and kids, making a comfortable life for them tends to override other motivations. Their priority might just be having a good life at home, not an exceptional position in society. A shift in focus creates a shift in priorities.