Every year Gallup releases its Gallup-Healthways Well-Being Index, which details how well Americans are doing in each of the key facets of life. The happiest states in the U.S. have a lot to like about them, yet finding happiness isn't as simple as picking up and moving to one of these locales. While it's fun to see where your state ranks, you can also learn a lot by looking at the metrics Gallup considers to be the most important for well-being. Read on to find out more.

The happiest states in the U.S.


Source: Gallup-Healthways Well-Being Index.

Perhaps it's no surprise that Hawaii is among the top 10 happiest U.S. states, but North Dakota and South Dakota led the pack. We should note that this ranking does not include Washington, D.C., as it is not a state. However, in terms of the happiest cities in the U.S., the D.C. metropolitan area finished third, behind San Jose, Calif., and the San Francisco Bay Area. The full top 10 list for 2013 is as follows:

GSource: Gallup-Healthways Well-Being Index.

How to measure the state of happiness
Gallup measures happiness through the Well-Being Index, which is calculated through daily polls of thousands of Americans throughout the year. The Well-Being index is made up of six subindexes:

  1. Life evaluation
  2. Emotional health
  3. Physical health
  4. Healthy behaviors
  5. Work environment
  6. Basic access

Life evaluation combines the assessment of one's present life situation with one's anticipated situation five years from now. "Basic access" is based on 13 items measuring residents' access to food, shelter, healthcare, and a safe and satisfying place to live. The other four metrics are basically self-explanatory.

States are scored and then ranked from No. 1 to No. 50 on each subindex. The states are then ranked by the composite average across the six subindexes. The good news is that Americans as a whole are doing pretty well, with the index results ranging from a high of 70.4 out of 100 (North Dakota) to a low of 61.4 (West Virginia). There is not a large difference between the top states, so small shifts in data can move a state far up or down the list.


Source: Gallup-Healthways Well-Being Index.

The real power of the index is in showing decisively where states can improve by breaking down the six key facets of well-being.


Source: Gallup-Healthways Well-Being Index.

The data goes as granular as the top 200 metropolitan statistical areas in the U.S.

To get an idea of how much Americans' well-being can vary by region, let's look at the No. 1 and No. 50 states on the list.

The happiest state in the U.S.: North Dakota
In 2013, North Dakota moved up to the top from 19th place in 2012. The breakdown is as follows:


Source: Gallup-Healthways Well-Being Index. State of North Dakota Well-Being.

Life evaluation scores have a smaller standard deviation across the nation than other subindexes, so small shifts in sentiment can move a state's position wildly, explaining North Dakota's jump on this metric from 26th place in 2012 to fourth the next year. North Dakotans are remarkably positive emotionally, with the second-highest emotional health scores in four of the past six years. North Dakota has been top in work environment two of the past three years. The state has the lowest unemployment rate in the country, stemming from the fracking oil and gas boom. The energy boom has brought a large influx of oil and gas workers in locations that previously did not have much infrastructure, explaining the worsening trend in residents' access to basic needs.

The state with the most room for improvement: West Virginia
West Virginia finished 50th in well-being for 2013, unchanged from 2012.


Source: Gallup-Healthways Well-Being Index. State of West Virginia Well-Being.

Although West Virginia finished last among the 50 states, the bright side is that the state's scores are still relatively high and not significantly worse than those of the top state in the country. The two notable gaps in scores are in life evaluation -- West Virginians are not very positive about their current situation or their near-term future -- and physical health, where the state ranked lowest in the country.

West Virginia's coal industry was hit hard by the combination of the economic downturn and the natural-gas boom that made coal comparatively expensive for producing power. As the natural-gas boom has expanded to West Virginia and the U.S. coal industry has begun to export some of its output to Europe, some of those jobs have come back. While West Virginia ranks 31st by unemployment, that understates the problem, as only 54% of its population is either employed or looking for work, compared to 63% nationally. Also, West Virginia was one of only two states reported by the U.S. Census Bureau to have declined in population in 2013.

Foolish takeaway
The Gallup-Healthway Well-Being Index gives people and leaders an interesting framework to think about what is important in life and where to focus their efforts. It's good to remember that there's more to life than money and that the biggest gains and losses are often the result of nonfinancial choices.

That said, financial wealth is one key facet of well-being. That's why for over 20 years, The Motley Fool has focused on showing investors the way to financial freedom.

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Dan Dzombak can be found on Twitter @DanDzombak, on his Facebook page DanDzombak, or on his blog where he writes about investing, happiness, life, and success.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.