The Happiest Countries -Denmark, Norway, Finland and the Netherlands

Income of course matters to everyone, especially the poorest. As the report shows, the richest countries are a lot happier than the poorest. The four happiest are all in Northern Europe, and the four least happy are in Sub-Saharan Africa. On a 0-10 scale, the average life evaluation score is 7.6 in the first four countries and only 3.4 in the last four.

But income is only one among many factors that explain the variation in happiness among people.  Income explains only about one-twentieth of the variation within nations that can be explained statistically, and across countries it explains about one-eighth of the explained variation. The other factors besides income can be divided into those that are mainly social and those that are mainly personal.

Countries differ hugely in the strength of their networks of social support ("If you were in trouble do you have relatives or friends you can count on to help you whenever you need them?"). They also differ in the degree of corruption in government and business, and of course in personal freedom and security.  All these factors matter a great deal.  So too does the state of the labor market.  High and stable employment is extremely important.  Therein lies the case for active labor market policies, job training, and various innovations in working hours flexibility.

Turning to more personal factors, a crucial one is mental health. A person's mental health many years earlier is a better predictor of his current happiness than his current level of income.  Mental illness comprises more than 40 percent of disability in advanced countries, according to the World Health Organization. Yet even in rich countries, it is estimated that only around one-fourth of the mentally ill are in treatment.

Physical health is also a major factor affecting happiness.  It has to be a major priority in poor countries, and in rich countries for people in retirement.

Not surprisingly, individual values are also important. People who care more about other people are also themselves on average happier.  Other things equal, people who single-mindedly chase higher incomes are less happy.  And psychologists and neuroscientists can now show that training in altruism increases a person's happiness.