Oh no—was that meant to be FUNNY?
This question comes up in a lot of job interviewers' minds. The person you're interviewing with just made a joke. You think, are they trying to trick me into breaking my cool exterior—only so they can shout “AH HA—THEY were UNPROFESSIONAL” as soon as I walk out the door? Are they testing to see if I'll kiss up enough to laugh at everything they say?
Especially if it just wasn't funny.
The fact is that in most cases (the exceptions being where the humor is off color or offensive), the interviewer is simply trying to see what you're personality is like. They're trying to establish rapport with you. They ARE trying to break you down a little bit because no matter how qualified you are for a job, nobody wants to work with anyone who is as dull as white paint.
So what should you do? You don't have to respond with a knee-slapping guffaw at everything they say, but if it's funny, then it's fine to laugh. It will probably help you and them relax. If it's not particularly funny, you can put on a nice smile (I don't like the phrase “polite smile” because that can look to patronizing). How would you respond if your friend or spouse said something that was vaguely amusing but not hysterical? The interviewer—just like all other normal human beings—would like to be acknowledged for the attempt. If something funnier is said later in the interview, it is perfectly fine to laugh at that. The point being that you want to appear relaxed and fun to work with.
Think of it this way—imagine how Julia Roberts or Brad Pitt conduct themselves in an interview. They're not laughing like hyenas on the interview couch, but manage to appear friendly and personable. People that you wouldn't mind chatting with on a Monday morning or going on a 4 day business trip with.
The exception to this rule is in the case of off-color humor that causes you to blush. Yes, everyone in the working world should know better by now—and no, not all of them do. In this case you don't need to look like you go along with what they are saying, or that you are enjoying the joke. You can give them a sense of your level of discomfort by averting your eyes to the floor, or by taking charge of the interview and quickly changing the subject. They'll get the point. You should make a note to notice their reaction. Do they appear embarrassed at the gaffe, or do they look pleased with themselves that they made you uncomfortable. That's your clue as to the type of environment you're interviewing for, and can actually be more telling than anything else you notice that day.
But in general—just be friendly. If you find something funny—laugh. If not, then give them a warm smile and project an approachable attitude in other ways throughout the interview.