Panama has topped the global well-being index and is positioned way above the US, which is at 23rd spot, while Afghanistan is at the bottom of the list.
The tiny nation, consisting of four million people, topped the list of 145 countries for the second consecutive time with 53% of its residents thriving in three or more areas of well-being -- measures that include a person's sense of purpose, financial well-being and physical health.
The Gallup-Healthways Global Well-Being Index tracked territories and areas besides nations.
The fall of the US from 12th spot last year was due to "fewer people being satisfied with their feelings of community as well as reporting less positive social ties", said Dan Witters, who compiled the index.
"People in Panama will report a lot of daily happiness, a lot of daily smiling and laughter, and a lot of daily enjoyment without a lot of stress and worry," Witters said.
Afghanistan ranked the lowest in overall well-being, as none of its residents were considered thriving, while Europe led the world in financial well-being, Gallup said.
In general, residents of American regions were most likely to be thriving in well-being and residents in sub-Saharan Africa the least likely, the index found. Latin American countries topped the list, making up seven of the top 10 countries.
The index was based on interviews conducted with more than 146,000 people aged above 15 years, in 145 countries, territories and areas in 2014.
Puerto Rico and Northern Cyprus are among the territories and areas that are not countries that were included in the index.
Panama, which is located on the isthmus linking the north and south America, has the second largest economy in Central America and is the fastest growing economy and largest per capita consumer in the region.
In 2013, Panama ranked fifth among Latin American countries in terms of the Human Development Index, and 59th in the world. It is also considered a pensioner's paradise.
The Isthmus of Panama was formed about 3 million years ago when the land bridge between North and South America finally closed. Dense jungles cover around 40% of its land area and are home to indigenous species of plants, animals and birds.