We have a very specific thing in mind when we talk about happiness or overall wellbeing. It's simply the average answer given by respondents to a single survey question. The question is: Using a scale of 0 to 10, where 0 means `Very dissatisfied' and 10 means `Very satisfied', how do you feel about your life as a whole right now?
You can read about why researchers and policy-makers care so much about the answer to this one question. Lots of quick answers are on the F.A.Q. page.