The 2015 World Happiness Report is the third annual report seeking to quantify happiness as a means of influencing government policy.
Switzerland takes over top spot from Denmark, ranked first in the last edition of the study first published by the UN in 2012, and now demoted to third.
Iceland ranked second, while Norway came fourth followed by Canada, Finland, the Netherlands, Sweden, New Zealand and Australia in the top ten.
Small or medium-sized countries in Western Europe accounted for seven of the top ten happiest countries.
To rate happiness in different countries, academics identified such variables as real GDP per capita, healthy life expectancy, having someone to count on, perceived freedom to make life choices, freedom from corruption and generosity.
These are all areas that Switzerland scored highly in, after coming third in the previous Happiness Report issued in 2013.
Jeffrey Sachs, director of the Earth Institute at Columbia University and one of the editors, said the top 13 countries were the same a second year running although their order had shifted.
They combined affluence with strong social support, and relatively honest and accountable governments, he told a news conference.
"Countries below that top group fall short, either in income or in social support or in both," Sachs explained.
The United States trails in 15th place, behind Israel and Mexico, with Britain at 21, pipped by Belgium and the United Arab Emirates.
France ranks number 29, behind Germany in 26th place.
Afghanistan and war-torn Syria joined eight sub-Saharan countries in Africa — Togo, Burundi, Benin, Rwanda, Burkina Faso, Ivory Coast, Guinea and Chad — as the ten least happy of 158 countries.
Despite the conflict raging in Iraq, that country was ranked 112, ahead of South Africa, India, Kenya and Bulgaria.
The 166-page report was edited by Sachs, John Helliwell of the University of British Columbia in Canada and Richard Layard from the London School of Economics.
"One of our very strong recommendations is that we should be using measurements of happiness . . . to help guide the world during this period of the new sustainable development goals," Sachs said.
Iceland, Ireland and Japan resilient
The report would be distributed widely at the United Nations and closely read by governments around the world, he said.
"We want this to have an impact, to put it straight forwardly, on the deliberations on sustainable development because we think this really matters," Sachs said.
Besides money, the report emphasized fairness, honesty, trust and good health as determinants, saying that economic crisis or natural disaster themselves did not necessarily crush happiness.
Iceland and Ireland were the best examples, the report found, of how to maintain happiness through resilient social support despite the severity of banking collapses during the financial crisis.
The Fukushima region of Japan also saw "increased trust and happiness" after the 2011 earthquake by allowing people to build their mutual dependence and cooperative capacities, it said.
On the other hand, recession-hit Greece was the "biggest happiness loser," down almost 1.5 points from 2005-2007 to 2012-2014, and where data points to the erosion of trust, it said.
They said more and more governments are listening and responding with policies that put well-being first.
Political consensus in Britain, Layard said, had fueled "a major transformation" in mental health services to give evidence-based treatment to 500,000 people with 50 percent recovery rates.
But he singled out German Chancellor Angela Merkel as "the most interesting world leader" in responding to happiness data.
He praised her for initiating a grass roots project "of very great importance" that seeks to find out "what people want to see changing in order that their well-being might change."
A positive outlook during childhood also lays the foundation for greater happiness during adulthood, the report found.
"We must invest early on in the lives of our children so that they grow to become independent, productive and happy adults, contributing both socially and economically," Layard said.