3QuarksDaily has an interesting piece on the psychology of humour and how it is used to negotiate and establish social hierarchies.
The article looks at two theories of humour that try understand what makes something funny. A common explanation is the ‘incongruity’ idea, that suggests when something is suddenly out of context it is more likely to seem funny.
But as the article notes, these theories “fail to explain why we are amused by certain instances of incongruity ‚Äì a man showing up to his job at a real-estate agency with a ‚Äúkick me‚Äù sign on his back ‚Äì but not others ‚Äì a man showing up to his job at a real-estate agency with a cure for cancer”.
The other approach is the ‘superiority’ theory, that suggests that humour is used to establish social hierarchies – those considered objects of humour are further down the social ranking.
But it’s also the case that we seem to use it as a form of flattery for our superiors – various studies (nicely summarised in this NYT article) find that we are much more likely to laugh at the jokes of people higher up the social hierarchy.
The 3QD piece considers the role, development, and rather intriguingly the morality of humour. It’s a little short on links to actual studies which is a little frustrating but it otherwise an interesting and informative exploration.
Link to 3QuarksDaily article ‘Is Humor Immoral?’.
Mind Hacks 
I’m more amused by the thought of, “a man showing up to his job at a real-estate agency with a cure for cancer.” Perhaps I’m odd in finding extreme incongruities even funnier than mild ones (Jack Handey’s Deep Thoughts, anyone?).
Regarding the hierarchical theories: I suspect some of the laugh/don’t-laugh effects are due to levels of inhibition or openness in a given social setting, rather than how “innately funny” we find a given joke/comment.
While some humor can be used to pick on those lower on the social hierarchy, it’s far more common to pick on celebrities, politicians, or those percieved to be “higher up” on a social hierarchy as it allows a kind of vent on a class level. It’s generally frowned upon to laugh at someone lower on the social scale as that’s considered bullying behavior. Who would you rather laugh at? a homeless person or family or a well-to-do doctor or lawyer? Comedy, it’s the great equalizer.
In theatre, they have known for some time that status is something you do, not something you have. Even a homeless person can display high status (king pretending to be a homeless person), whereas a doctor can display low status.
If status of somebody with low status (such as stereotypical homeless person) drops, we feel sorry. But when status of high status person drops, it becomes comedy and we laugh.
Because jokes are transmitted using language and often rely on stereotypes, it is cumbersome to establish high status for a homeless person. That is why it is so rare to see jokes about homeless people. But they still exist. I did a Google query on “bum joke”, and this was the first one I found:
A bum asks a man for $2.
The man asked, “Will you buy booze?”
The bum said, “No.”
The man asked, “Will you gamble it away?”
The bum said, “No.”
Then the man asked, “Will you come home with me so my wife can see what happens to a man who doesn’t drink or gamble?”
This joke plays on the stereotype that bums will drink and gamble their money, as well as on the stereotype that women nag to their men about their drinking and gambling. The subliminal stereotype is that the wife actually dominates in the marriage, because she can control his behavior by nagging.
In the beginning, the man approached by the bum obviously has higher status, and the status is raised further by the questions that implicitly make the listener to assume that the bum is lying. We are also made to believe that the man knows this by his line of questioning.
Then we have the incongruency: the man assumes that the bum is telling the truth, and starts daydreaming about confronting his wife about his right to drink and gamble, and uses the bum as evidence.
We are automatically made to think what would really happen in such a situation, and realize that a man who is dominated by his wife does not have any chance of convincing her by using bum as a proof. He ends up looking like an idiot, and his status drops.
Thus, the status of the man drops from high to low, and we laugh at that. Because status is relative, the status of the bum simultaneously raises.