Good health, freedom of choice, political liberty, civil rights - these, along with high income, make Australians the most prosperous people in the world, found a study by the Dubai-based Legatum Institute ranking countries according to their prosperity.

The privately-funded think tank noted that there was no direct correlation between wealth and happiness. While it was true that income was a good indicator of wellbeing in very poor countries, earnings did not link with happiness in rich countries.

Study after study has downplayed money as a predictor of how we feel about our lives. It's a finding that comes as no surprise to Melbourne lawyer and academic Mirko Bagaric.

"Once we're above the poverty line, money makes only a small contribution to our level of happiness - and once we reach about the average level of income it makes virtually no difference to our level of contentment," he said.

"The things that are conducive to happiness are fit and healthy bodies, realistic goals, self-esteem, optimism, an outgoing personality, a sense of control, close relationships, challenging work and active leisure punctuated by adequate rest and a faith that entails communal support, purpose and acceptance."