Human beings are surprisingly poor at estimating how happy something would make us. It turns out that your long-term happiness is largely fixed and resilient to shocks. Winning the lottery or losing a limb does affect your happiness, but not nearly as much as you might expect.
A major problem in estimating a change in happiness is that we are envisioning the moment of the change itself, rather than the average change over time. A cookie makes you happy right now, but that effect goes away within the hour. Losing a limb makes you unhappy right now, but that effect also usually fades over time (more than an hour).
In-game, you are envisioning the moment you get a really great drop. That is a really great moment, winning a small lottery. But how much happiness does that bring you over time? Moving up to “best in slot” is often a tiny percentage improvement. You need quite a few of those best-in-slot drops for the effect to be noticeable, and what you envision there is the item grind.
Or maybe gameplay will become too easy after that, so your great moments create an average decrease over time. Remember, you’re surprisingly poor at estimating what makes you happy. Don’t worry, that effect also fades over time as the new best-in-slot gear is added, at which point you can start pursuing that.