The report, released Wednesday by the United Nations' Sustainable Development Solutions Network, ranks the countries of the world based on where they stack up within six different categories of well-being: income, freedom, trust, life expectancy, generosity and social support.
Rounding out the Top 10 are Denmark, Iceland, Switzerland, Netherlands, Canada at No. 7, New Zealand, Sweden and Australia.
The United States, which has never secured a spot in the top 10, dropped four places compared to last year's report.
The report also said migrating to another country provides for many people a major opportunity to obtain a happier life, especially to countries that accept them. The countries with the happiest immigrants are not the richest countries, but instead the countries with a more balanced set of social and institutional supports for better lives.
The majority of its immigrants come from other European nations but it also has expats from Afghanistan, China, Iraq and Somalia. Researchers wanted to see if a country's average happiness differed when discriminating between natives and those born overseas.
The UN report devotes a special chapter to why the USA, once towards the top of happiness table, has slipped down the league despite having among the highest income per capita.
For the first time the United Nations also examined the happiness levels of immigrants in each country, and found Finland also scored highest. He said the study shows that a population's happiness seems contagious.
A total of 156 countries took part in the survey, which is is compiled using Gallup polls asking people to evaluate various aspects of their lives on a scale from 0 to 10.
'Briefly put, (Nordic countries) are good at converting wealth into well-being, ' Wiking said. You're no longer the world's happiest country.
It added that the "sociopolitical system" in the USA produces more income inequality - a major reason for unhappiness - than other countries with similarly high-income levels. Most of the top 10 are social democracies, which "believe that what makes people happy is solid social support systems, good public services, and even paying a significant amount in taxes for that".
According to Prof. John Helliwell of the University of British Columbia in Canada, said "The most striking finding of the report is the remarkable consistency between the happiness of immigrants and the locally born".