This level is sourced using "the main factors found to support happiness: caring, freedom, generosity, honesty, health, income and good governance".
The First World Happiness Report was released on April 2012 and it is a global initiative launched by United Nations.
Malaysia has been ranked as the fourth happiest country in Asia.
"Norway moves to the top of the ranking despite weaker oil prices", the report noted.
The United States fell in at number 14, down a spot from previous year.
Four of the top five happiest countries, according to this year's report, are Nordic countries: Norway (one), Denmark (two), Iceland (three), and Finland (five).
People are asked to envision a ladder, with their "best possible life" being a 10 on the top rung, and the worst possible life being a 0.
"By choosing to produce oil deliberately and investing the proceeds for the benefit of future generations, Norway has protected itself from the volatile ups and downs of many other oil-rich economies", notes Prof.
Surprisingly, the United Kingdom made the top 20 for the very first time since the report was first produced in 2012, climbing a full four positions since a year ago.
This year the report gives special attention to the social foundations of happiness, including happiness at workplace. Other countries with unrest and war, such as Syria, also rank at the bottom.
Last December, Global risk analysts Verisk Maplecroft also named Mexico as the third most risky country in the world, ahead of Iraq and Syria.
Denmark, the 2016 victor, is second on the list of 155 countries, followed in order by Iceland, Switzerland and Finland.
They include gross domestic product per capita, healthy years of life expectancy, social support (someone to count on in times of trouble), trust (absence of corruption in government and business), generosity (as measured by recent donations) and perceived freedom to make life decisions. "It's time to build social trust and healthy lives, not guns or walls".
America's problems with rising income inequality, distrust with the government, how the country reacted to the aftermath of the September 11 terrorist attacks and the nation's "deteriorating" educational system are some possible factors cited in the report.
"The United States can and should raise happiness by addressing America's multi-faceted social crisis-rising inequality, corruption, isolation, and distrust", he wrote. "America's crisis is, in short, a social crisis, not an economic crisis..."