Are the Danes really that happy?

Reuters is reporting that Denmark is the world's happiest country. At least that's according to the University of Michigan's Institute for Social Research (ISR). [Click to read the article I just read and a press release from the institute.]

The ISR makes the point that happiness is increasing which is probably a less sexy headline than "Denmark world's happiest country, survey finds."

This survey has been conducted since 1981 and uses just two questions to create a composite measure of subjective well-being. The questions are: "Taking all things together, would you say you are very happy, rather happy, not very happy, not at all happy?" And, "All things considered, how satisfied are you with your life as a whole these days?"

I don't quite get it.

It would seem that anyone who majored in any social science at even a 3rd rate college would know better than to assume that people in all countries will give equally veridical accounts of their happiness. There are different cultural norms regarding such self-reports. Or, at least, there is reason to suspect that there might be. Some cultures may consider it bragging to say that you are happy...

So isn't it entirely possible - or at least worth ruling out - that cross-country differences in the ISR's happiness index are mere cultural artifacts and not genuine differences in happiness? I am much more comfortable with their use of the data within a given country as opposed to across countries, because in such analyses the cultural bias is greatly reduced. But even intra-country analyses are influenced by demographic and sociocultural shifts. Migration and even demographic shifts (like the aging boomers in he U.S.) could potentially sway these scores.

I hate to argue with something like this. The folks who run these surveys are social scientists who do this for a living. But as far as I can tell, this is a fatally flawed research methodology.

What am I missing?