Science is a method of using a combination of theorization and observation to model the world in ways that help us predict future observations. Models are built

Science is a method of using a combination of theorization and observation to model the world in ways that help us predict future observations. Models are built by carefully accounting for (both with theory and statistics) and apportioning systematic variance in the world. We measure, we recognize covariation, and we theorize about the underlying causal relationships that might explain that covariation. By repeating and refining this process, we advance toward better models of the world that can either explain more variance, or explain the same amount of variance with fewer parameters. Psychology fulfills all of these criteria. Yes, happiness is subjective, but there is systematic variance that can be accounted for. Psychology just tends to study a lot of complex behaviours that have to be measured indirectly, either through self-report or behaviour. But there's still systematic variance, and psychology uses theory to explain that variance using underlying causal mechanisms. Nothing in here is any different than other sciences. Scientists study plenty of things that are latent and cannot be directly observed. That's part of what makes science so powerful -- being able to incorporate those aspects that can't be directly observed into a theory that encompasses both the unobserved and the observed, and explains their relationships with each other.