The World Happiness Report measures "subjective well-being" - how happy people feel they are, and why.
Nordic countries regularly appear in the top five, while war-hit countries and a number in sub-Saharan Africa regularly appear in the bottom five.
Burundi was the least happy, taking over from the Central African Republic.
It was thrown into crisis when President Pierre Nkurunziza's bid for re-election to a third term in 2015 sparked protests by opposition supporters who said the move was unconstitutional.
This year's report by the UN Sustainable Development Solutions Network also features data about the happiness of immigrants in their host countries, with Finland also coming top as home to the happiest immigrants.
"I think everything in this society is set up for people to be successful, starting with university and transportation that works really well," American teacher Brianna Owens, who lives in Finland's second biggest city Espoo, told Reuters news agency.
| The world's happiest - and least happy - countries | |
|---|---|
| Happiest | Least happy |
| 1. Finland | 147. Malawi |
| 2. Norway | 148. Haiti |
| 3. Denmark | 149. Liberia |
| 4. Iceland | 150. Syria |
| 5. Switzerland | 151. Rwanda |
| 6. Netherlands | 152. Yemen |
| 7. Canada | 153. Tanzania |
| 8. New Zealand | 154. South Sudan |
| 9. Sweden | 155. Central African Republic |
| 10. Australia | 156. Burundi |
Some 156 countries are ranked by their happiness levels, and 117 by the happiness of their immigrants.
Norway, Denmark, Iceland and Switzerland were the other countries in the top five. The UK and US came in at 19th and 18th places respectively.
Togo is seen to be this year's biggest gainer, moving up 17 places, while the biggest loser is Venezuela, which dropped 20 places to 102nd.
'Happy countries, happy migrants'
The study found that the 10 happiest countries also scored highest on immigrant happiness, suggesting that migrants' wellbeing was tied to the quality of life in their adopted home.
With a population of around 5.5 million people, Finland counted some 300,000 foreigners in 2016, reports say.
"The most striking finding of the report is the remarkable consistency between the happiness of immigrants and the locally born," said John Helliwell, co-editor of the report and a professor at the University of British Columbia.
The report relies on asking a simple, subjective question of more than 1,000 people in more than 150 countries.
"Imagine a ladder, with steps numbered from 0 at the bottom to 10 at the top.
"The top of the ladder represents the best possible life for you and the bottom of the ladder represents the worst possible life for you. On which step of the ladder would you say you personally feel you stand at this time?"
The average result is the country's score - ranging from Finland's 7.6 to Burundi's 2.9.
But the report also uses statistics to explain why one country is happier than another.
It looks at factors including economic strength (measured in GDP per capita), social support, life expectancy, freedom of choice, generosity, and perceived corruption.
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