The World's Happiest Countries

Most of the nations atop our list are democratic, business-friendly, and boast strong social safety nets.

Think about it for a minute: What does happiness mean to you?

For most, being happy starts with having enough money to do what you want and buy what you want. A nice home, food, clothes, car, leisure. All within reason.

See the full list of The World's 10 Happiest Countries

The Top 5 Happiest countries in the World

1. Norway

2. Denmark

3. Finland

4. Australia

5. New Zealand

But happiness is much more than money. It's being healthy, free from pain, being able to take care of yourself. It's having good times with friends and family.

Furthermore, happiness means being able to speak what's on your mind without fear, to worship the God of your choosing, and to feel safe and secure in your own home.

Happiness means having opportunity--to get an education, to be an entrepreneur. What's more satisfying than having a big idea and turning it into a thriving business, knowing all the way that the harder you work, the more reward you can expect?

With this in mind, five years ago researchers at the Legatum Institute, a London-based nonpartisan think tank, set out to rank the happiest countries in the world. But because "happy" carries too much of a touchy-feely connotation, they call it "prosperity."

Legatum recently completed its 2010 Prosperity Index, which ranks 110 countries, covering 90% of the world's population.

To build its index Legatum gathers upward of a dozen international surveys done by the likes of the Gallup polling group, the Heritage Foundation and the World Economic Forum. Each country is ranked on 89 variables sorted into eight subsections: economy, entrepreneurship, governance, education, health, safety, personal freedom and social capital.

The core conceit: Prosperity is complex; achieving it relies on a confluence of factors that build on each other in a virtuous circle.

Ultimately how happy you are depends on how happy you've been. If you're already rich, like Scandinavia, then more freedom, security and health would add the most to happiness. For the likes of China and India (ranked 88th), it's more a case of "show me the money." What they want most of all? The opportunity to prove to themselves that money doesn't buy happiness.

No. 5: New Zealand

With very high levels of social cohesion and a first-place ranking in education, New Zealanders trust and help each other. The country ranks first in civil liberties. Ninety-four percent found the beauty of their physical environment satisfying (the other 6% must be blind).

No. 4: Australia

Excellent education, strong personal freedoms, a tight-knit society. Australia's economy is strong, led by raw materials exports, but it's also a good place to start a business, with plentiful Internet connectivity and low startup costs. Aussies trust their government.

No. 3: Finland

Excellent education, universal health care, plentiful personal freedoms, trusted government, peaceful. Lots of R&D and low business startup costs give the Finns economic strength. But as is to be expected in a country with the highest redistribution of wealth, only 75% of Finns believe working hard will help them get ahead.

No. 2: Denmark

The world's lowest business startup costs, excellent education, unrestricted civil freedoms. Danes have overwhelming faith in their government and in each other, and report the highest standard of living in the world.

No. 1: Norway

The world's highest per-capita GDP at $53,000 a year. Spending on health care is second-highest after the U.S. An unparalleled 74% of Norwegians say other people can be trusted, 94% are happy with the beauty of their environment, and a very high 93% believe hard work will help them get ahead in life. Having a lot of oil and gas reserves helps.

See the full list of The World's 10 Happiest Countries

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