This article is considered accurate for the current version of the game.
Happiness is an attribute tracked to show the general satisfaction of your citizens. When your citizens' needs are catered to and they have jobs and places to go spend their money, they are happy and pay more taxes. Happiness also increases the chance for buildings to level up. Unemployment, low health, and lack of safety causes unhappiness in citizens.
Happiness is primarily achieved by offering your citizens all the required services, and by developing a efficient and balanced city. Balance and efficiency are quite important. A low-level, low land value city can be quite a happy one. However, for example, if a commercial building suddenly upgrades levels and doesn't have access to a more educated workforce, its happiness will begin to suffer. Additionally, traffic efficiency plays a major role. Zoning more industry to alleviate a lack of goods in a commercial sector will only be successful if the goods can make it from the factories to the stores. In fact, commercial buildings could import everything they need, if traffic was efficient enough to support it.
Happiness is divided into four categories: Residential, Commercial, Industrial, and Offices. This can be viewed from the happiness overlay represented by the smiley-face icon.
Several methods can be used to increase happiness. While each zone-type has a slightly different set of criteria, the general method is to ensure that all services are being provided through schools, hospitals, police and fire stations, parks, etc. Taxes and policies can also have an impact on happiness. A happy citizen does not require a high land value or building level, but the happier citizens are, the more likely the building is to level up.
Ensure your citizens feel safe, protected, and employed. Pollution is an extremely negative factor for residential zones. In addition to placing hospitals to help with the sick, you need to ensure that you have adequate sewage removal, that you don't zone over ground pollution from industry, that waste management can service the homes efficiently, and that noise pollution is kept at an acceptable level. Residential happiness is less affected by taxes than the other zone types. In fact, the happier the citizen are, the more they can be taxed without being penalized. Keep in mind that the population of your city ebbs and flows. A spike in deaths can overwhelm your death-care services, while an increase in children can flood your schools. These changes in population will also affect your available labor pool and could lead to either high or low unemployment, impacting happiness. While high unemployment doesn't seem to impact residential happiness directly, it can increase crime which will decrease happiness. The Pet Ban and Smoking Ban policies, even though they claim to reduce happiness, can actually increase the level of residential happiness if the net boost to health or reduction of waste is sufficient enough.
Commercial buildings need access to a sufficiently educated workforce, goods to sell (either shipped from industrial zones or imported), the sale of goods, taxes, and services. Ensure that there are strong supply chains so that goods and citizens can reach your commercial zones. Stores will attempt to use local industry first before importing. This can cause an issue if all of your industry is in one part of the map. Possible solutions include dispersing your industrial zones and adding transportation services, such as freight train stations and harbors, to move goods throughout your city. As commercial buildings advance in building level, they will require more workers as well as a more educated workforce. Lowering taxes can also boost commercial happiness. The Small Business Enthusiast and Big Business Benefactor policies do not have a direct impact on happiness. However, they can indirectly affect happiness by increasing the amount of traffic from increased supply deliveries.
Commercial happiness can be the most challenging to increase and many have reported issues getting it above 85%, even with 1% taxes and tax reduction policies. Part of the reason might be in the game's leisure mechanics. To your citizen and tourists, shopping at a store is a form of leisure (not marked on the leisure map) much like visiting a park or plaza. If a city is flooded with parks, citizens might be getting their leisure fulfilled there before visiting the commercial district. However, if this is the case, it is usually not extreme enough to warrant a lack of customers warning.
Industry converts raw materials into usable goods. To be happy, they need frequent shipments of raw materials, a place to sell finished goods (either at commercial stores or exported), sufficiently educated employees, and services. Along with commercial, industrial happiness is very dependent on a strong supply chain and good traffic flow. Placing all of your industry in a corner of the map may be a good way to prevent pollution from reaching your residents, but can cause some major traffic problems once your city is sufficiently large, and make it harder for employees to make it to work. Consider making multiple, small groups of industry around the map, connecting your industry with multiple paths to both the highway and commercial zones, and using freight trains and ships to help transport goods and materials. Freight trains do not need to connect to the outside network to be effective. Connecting two or more industrial and/or commercial zones with freight stations is an effective way to help reduce and bypass traffic. You can also help direct industrial traffic through the use of the Heavy Traffic Ban policy by placing it on certain districts. Reducing taxes can also improve happiness. The Industrial Space Planning policy does not have a direct impact on happiness. However, it can indirectly affect happiness by increasing the amount of traffic from exports.
Trains are an efficient way to transport goods and materials around the map. However, just like roads, railways can face traffic congestion. There are a few ways to help minimize congestion. Especially in smaller cities, freight trains are much more important than passenger trains. While passenger stations can bring in additional tourists and move citizens around the city, the low numbers of passengers usually don't justify the expense or extra rail traffic on smaller cities. Ignoring passenger trains, or at least segregating passenger trains from freight trains by putting them on different rail roads is preferable. When making train intersections, don't try to make them as small as possible. Instead, make each intersection long enough so that a full train can sit on the exchange, allowing following trains taking another route to travel unimpeded. On mixed freight/passenger lines, consider making a rail bypass around the station so that a following train can pass while a leading train is stopped.
There appears to be a current bug with trains. Occasionally they will get stuck off the map and prevent other trains from moving.
Offices are a little more forgiving than industrial and commercial zones since they don't produce or sell goods. Offices need to staffed by sufficiently educated employees (generally more highly educated than industrial or commercial). Reducing taxes can also improve happiness.
Global Happiness is the average of the four types of happiness: Residential, Commercial, Industrial, and Office. The global happiness can be viewed from the City Statistics window. It is not a straight average of the citizen happiness window, but a weighted average based on the number of buildings for each particular zone. It is global happiness that is used to complete achievements such as Unpopular Mayor and Happy Town.