Norway, Denmark, Iceland and Switzerland rounded out the top five in the ranking, which rates happiness levels based on factors such as life expectancy, social support, freedom and corruption.
Germany came in at number 15, ahead of the United States (18th) and the United Kingdom (19th).
The unhappiest countries were Burundi, the Central African Republic, South Sudan, Tanzania and Yemen.
Read more: What makes Germans happy?
Happiness is contagiousThis year, the annual report also ranked countries according to the happiness and well-being of their immigrants. And again, Finland — home to around 300,000 foreigners — came out on top.
"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.
Read more: Danes are king when it comes to 'Happiness'
In fact, he noted, the 10 countries that scored highest in overall happiness also had the happiest immigrants. But that trend didn't necessarily continue down the list. Germany, which saw hundreds of thousands of arrivals during the 2015-16 migrant crisis, only ranked 28th in terms of immigrant happiness.
US sliding down the listEurope's Nordic countries have dominated the happiness index since the first report was published in 2012. Last year's winner was Norway. In 2016, Denmark took the top spot.
Meik Wiking, CEO of the Copenhagen-based Happiness Research Institute, said the happiness revealed in the survey stems from healthy amounts of both personal freedoms and social security that outweigh residents having to pay "some of the highest taxes in the world."
"Briefly put, [Nordic countries] are good at converting wealth into well-being," Wiking said.
Read more: Norway's tips for achieving happiness
The United States, which has never secured a spot in the top 10, dropped four places compared to last year's report.
According to Jeffrey Sachs, a leading US development economist who contributed to the report, "the US happiness ranking is falling, in part because of the ongoing epidemics of obesity, substance abuse, and untreated depression."
Wiking from the Happiness Research Institute said the US had also seen declining "trust, generosity and social support, and those are some of the factors that explain why some countries are happier than others."
The annual report was released ahead of the International Day of Happiness on March 20.
nm/jm (AFP, dpa, AP)
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