Happier than average, but that average includes countries wracked by war, poverty and corruption.
Edit: the 2022 World Happiness Report ranks Japan at 54th out of 146 with a score of 6.039 normalized to 0.67, an improvement, and is now comparable to Mauritius, Uzbekistan and Honduras.
Do you really place so much stock in happiness surveys as an objective measure of reality? Particularly when the subject itself, happiness, is so subjective.
I would choose "very well educated". IMO you can't really judge happiness without an appreciation for different ways to be happy. I'm probably myopic in my idea of happiness because I haven't had children, but I'm pretty sure that a many people who have had children but not an education are as well. http://www.paulgraham.com/kids.html
"Happiness" is subjective, but suicide is as objective an expression of un-happiness as it gets. It's just an icky and emotional topic nobody wants to acknowledge.
I have a good laugh when free shit is used as an indicator of happiness though. Prisoners get free food, education and healthcare. The state will even take your children off your hands. Working is optional. Prison surely must be the happiest place on earth!
A society where 1% live in hell and commit suicide and 99% are perfectly content, is more happy than one where 100% are just happy enough to not off themselves and no more.
This reminds me of the short story by Ursula K. LeGuin, "The Ones Who Walk Away from Omelas", wherein Omelas, an ecstatically happy utopia, depends for its existence on the torment of one single child, kept in a basement dungeon. Citizens can view the child any time they please. Some never do, some only once, some quite often. Some, very few, after viewing the child, leave the city forever.
That to me looks only like an observation, not an argument in favor of anything in particular.
Personally speaking, I would not be happy if 1% of my fellow citizens were tormented so that I along with my 99% cohort could be happy, paradoxical as that is.
Let's use the observation to understand what's happening in our respective societies and make things better for everyone.
Inequality is low in Japan but the people in general are not that rich these days and are getting poorer; it's a big problem. On the other hand, unemployment is significantly better than in 2010 - most of the cultural things you used to hear about Japan like crazy fashion were because all the young people were unemployed and had nothing better to do than stand around in Harajuku. And the famously low birth rate is up again and higher than other Asian countries. A lot of that is due to Abe's policies. (The last one gets all the memes.)
Happiness is not just an economic thing. It's also culture, and that takes generations to fix.
From an economic standpoint, Japan has a high standard of living. Good medical system, plentiful and cheap food, affordable housing, quality education, few crime and an endless amount of job vacancies.
On the other hand... the air quality has been awful this year..but you cannot have everything perfect in any country.
So was I, but the other responder is actually right, it's lower than US and "After peaking in 2003, suicide rates have been gradually declining, falling to the lowest on record (since 1978) in 2019."
Japan is notorious for recording things as "accidents" that are not accidents. Especially if it helps the police or family save face. This also applies to other things, like an artificially low homicide rate.
There is more to life than trying to get the made up number that is GDP to print a positive number every quarter.