But the variable they looked at that showed the strongest relationship with happiness was “human capital,” measured as the share of the population with a bachelor’s degree or higher:
I think it probably works something like this. Education pushes ones intellectual maturity to a point where they realize and enjoy the complexity and diversity in the world. They understand happiness to be something different than those without the benefits of more education. The are happy because they are interesting and interested in the world around them, even if they can't control it or understand it. It isn't the trade-off that Penelope Trunk suggests. Of course since this is only a bivariate correlation, education likely also has effects through the other channels, like increases in income, marriage, better sex lives, etc.