To their surprise, the two nations of the world that graded at the very top were Denmark and Singapore. It was a surprise to the researchers because they initially couldn't find anything in common between them: Denmark was known for being democratic, laid-back and libertarian, while Singapore was known for its fast-paced economic climate and its pretty repressive government run by a ruling family.
The two countries that ranked at the bottom of the list were Iraq and Italy.
When they looked a little closer, what the researchers found was that "happiness" was not primarily a function of freedom vs. repression in a society, but by a sense of objective order. Despite the perception among outsiders that Singapore's government was repressive (or even brutal, in some cases), what gave its citizenry a sense of contentment was that they lived under a legal system that was governed by an objective order in which all people would be treated just as harshly as the next if they violated that moral/legal code. They were perfectly fine with that, and the presence of that underlying objective order was the one key element that was common to both Singapore and Denmark.
Iraq and Italy, on the other hand, were marked by large-scale discontentment because most of the people in those countries went through their daily lives with the expectation that their government -- and even their entire social order -- was rotten to the core and corrupt beyond repair.
While that can be carried to opressive extremes, it is the ambiguity, stupidity (on occasion), and uneven enforcement of our laws which makes the system stressful to the average person who is not ludicrously naive.
In other words, “social happiness” is closely related to rule of law ideals (the pricincple all laws should be applied as consistently as possible to all).